Opinion issued November 20, 2014

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-13-00817-CV

———————————

HERCULES OFFSHORE, INC. AND THE HERCULES OFFSHORE 

DRILLING COMPANY, LLC, Appellants

V.

EXCELL CRANE & HYDRAULICS, INC., Appellee

On Appeal from the 133rd District Court

Harris County, Texas

Trial Court Case No. 2009-49993

OPINION

This dispute between Hercules Offshore, Inc. and The Hercules Offshore 

Drilling Company, LLC (collectively “Hercules”) and Excell Crane & Hydraulics, 

Inc. arises from the parties’ conflicting interpretations of indemnity and insurance 

provisions in their Master Service Agreement (MSA). Hercules contends that the 
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“additional assured” language in the MSA’s insurance provision means that 

Excell’s insurance must be exhausted before Hercules’s indemnity obligation is 

triggered. Excell, on the other hand, argues that Hercules’s indemnity obligation is 

primary, notwithstanding any other provision of the MSA, including the insurance 

provision. The trial court granted summary judgment in favor of Excell and denied 

Hercules’s motion for summary judgment. 

There is an additional wrinkle. This case arises out of a personal-injury 

lawsuit by Hercules employee Dennis Brunson, who sued Hercules and Excell in 

Texas state court. Meanwhile, another Hercules employee, Kevin Currey, who 

was injured in the same incident, sued Hercules and Excell in Louisiana state court. 

Excell prevailed against Hercules in the Louisiana litigation. The Louisiana 

judgment in Excell’s favor became final while this appeal was pending, and Excell 

now argues that the Louisiana judgment precludes further litigation in this case and 

that Excell is entitled to judgment based on principles of res judicata and collateral 

estoppel.

We conclude that res judicata and collateral estoppel do not apply, and that 

the trial court erred in granting summary judgment in favor of Excell and in 

denying Hercules’s summary judgment on the contract interpretation issue. 

Accordingly, we reverse the trial court’s summary judgment in favor of Excell, 

render judgment granting Hercules summary judgment with respect to liability on 
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its breach of contract claim, and remand for further proceedings consistent with 

this opinion.

Background

In 2007, Hercules was serving as the drilling operator of a semi-submersible 

drilling rig off the shore of Louisiana. Three Hercules employees, including 

Brunson and Currey, were injured when the rig elevator in which they were riding 

went into a free-fall. Excell had inspected and tested the elevator two months 

earlier, and it performed this work under the terms of the MSA. 

In August 2009, Brunson sued Hercules and Excell in Texas state court. 

Hercules later settled Brunson’s claims against both, leaving only Excell and 

Hercules’s dispute regarding the indemnity and insurance provisions of the MSA. 

Excell’s cross-claim against Hercules was based upon Paragraph 15.B. of the 

MSA: 

[Hercules] shall defend, release, indemnify and hold harmless 

[Excell], its parents, subsidiaries, affiliates, officers, directors, 

employees and agents from and against all liens, claims, demands, 

causes of action, costs, expenses or losses (including but not limited to 

attorneys’ fees) pertaining to, for or on account of injury to, illness or 

death of employees, or agents of [Hercules], or employees of the 

“vessel” as used under 33 U.S.C. § 905(c), or its affiliates, or loss or 

damage to property of [Hercules], or its affiliates which arise from, 

are incident to or result directly or indirectly from the performance of 

the Work, the presence of the above individuals at any job or work 

site, or transportation to or from such locations, performance of this 

Agreement, or breach hereof.
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Excell moved for summary judgment on its cross-claim, arguing that the indemnity 

provision unambiguously required Hercules to defend and indemnify Excell 

against Brunson’s claims. 

Hercules counterclaimed for breach of the MSA, arguing that it was not 

obligated to indemnify Excell under Paragraph 15.B. until the insurance that Excell 

was obligated to provide Hercules under Paragraph 9 had been exhausted. 

Paragraph 9 provided:

During the term of this Agreement, [Excell] shall maintain at its sole 

expense the minimum insurance coverage specified in Exhibit “A” 

with underwriters acceptable to [Hercules], and under the terms of 

coverage specified, all of which is adopted herein. Except as provided 

by law, the limits specified therein shall in no way limit liabilities or 

obligations of Excell for claims arising from performance of this 

Agreement and any applicable Work Order. . . . 

Exhibit A provided that Excell shall maintain comprehensive general liability 

insurance for overwater operations with a combined single limit of $1 million per 

occurrence and excess umbrella liability coverage for overwater operations with a 

combined single limit of $5 million. Exhibit A also provided:

All insurance policies shall contain a waiver of subrogation in favor of 

[Hercules], its affiliated companies, and any third parties to whom or 

for which [Hercules] is under contract or rendering services and/or its 

and their employees and agents. All insurance policies, except 

Worker’s Compensation, shall name all such parties as additional 

assureds. All such policies shall be endorsed to provide that 

additional assureds shall not be liable for premiums and that such 

policies shall be primary as to additional assureds, regardless of any 

“excess” or “other insurance” clauses therein. The coverage extended 

an additional assured shall not be less than that provided to the 
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Contractor. All policies will cover investigation and defense of 

claims. All policies will include contractually assumed liability 

coverage.

Thus, Hercules argued that the MSA required Excell to name it an 

“additional assured” on all required insurance policies, and that the policies were to 

be “primary” as to Hercules. Hercules further argued that the policies were 

required to cover “contractually assumed liability coverage”— including any 

liability assumed under the indemnity provisions of Paragraph 15 of the MSA. It is 

undisputed that Excell obtained some insurance coverage, but Excell concedes that 

it did not obtain coverage of the type Hercules argues that Paragraph 9 and Exhibit 

A require. 

Hercules moved for traditional summary judgment on Excell’s claim for 

indemnity and on its own claim for breach of the MSA. Hercules relied on Ogea v. 

Loffland Brothers Company, 622 F.2d 186 (5th Cir. 1980), and its progeny to argue 

that, where a contract provides that “contractually assumed liability coverage” 

must be covered under contractually-required insurance policies, and the coverage 

is required to be primary as to additional assureds, the obligation to provide 

insurance supersedes any indemnity obligation until the insurance coverage is 

exhausted. 
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Excell argued that this case was unlike Ogea and its progeny because 

Paragraph 15.E. of the MSA provided that the indemnity provision superseded the 

other provisions in the MSA: 

The allocations of risk contained in this Paragraph 15 or elsewhere in 

this agreement shall apply notwithstanding the simple, gross, sole, 

joint or concurrent negligence of any person or party (regardless of 

whether such person or party is an indemnitee or not), the 

unseaworthiness or other fault of any vessel, “ruin,” or strict liability, 

liability imposed by statute, defects in premises, equipment or 

material, or any other event or condition whether anticipated or 

unanticipated and regardless of whether pre-existing this agreement.

In support of this argument, Excell pointed to Paragraph 15.D. which required each 

party to support its contractually-assumed indemnity obligations with its own 

insurance. 

The trial court initially denied both motions for summary judgment. After 

both parties moved for reconsideration, the trial court granted Excell’s motion for 

reconsideration, vacated its order denying Excell’s motion for summary judgment, 

and granted Excell’s motion for summary judgment. The trial court entered a final 

judgment, ordering Hercules to defend and indemnify Excell for Brunson’s claims 

pursuant to the MSA. Hercules appealed.

Discussion

Hercules contends in a single issue that the trial court erred in granting 

summary judgment for Excell and denying Hercules’s motion for summary 

judgment as to the contract interpretation issue, because federal maritime law, 
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which the parties agree applies here, dictates that the “additional assured” language 

in the MSA’s insurance provision means that Hercules’s indemnity obligation is 

triggered only after Excell exhausts the insurance it agreed to obtain. Excell 

disagrees and argues that the facts of this case are distinguishable from those in 

which “additional assured” insurance obligations were held to be primary to 

indemnity obligations. Excell further argues that the doctrines of res judicata and 

collateral estoppel bar Hercules from relitigating this issue because the Louisiana 

judgment in Excell’s favor became final while this appeal has been pending. 

A. Standard of Review

We review a trial court’s decision to grant or to deny a motion for summary 

judgment de novo. See Tex. Mun. Power Agency v. Pub. Util. Comm’n, 253 

S.W.3d 184, 192 (Tex. 2007). “When both sides move for summary judgment, as 

they did here, and the trial court grants one motion and denies the other, reviewing 

courts consider both sides’ summary-judgment evidence, determine all questions 

presented, and render the judgment the trial court should have rendered.” Gilbert 

Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 124 (Tex. 

2010) (citing Embrey v. Royal Ins. Co. of Am., 22 S.W.3d 414, 415–16 (Tex. 

2000)).
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B. Applicable Law

Both parties agree that federal maritime law governs the substantive dispute 

in this case. Well-settled Fifth Circuit law, beginning with Ogea v. Loffland 

Brothers Company, 622 F.2d 186 (5th Cir. 1980), holds that a party “who has 

entered into a contractual indemnity provision but who also names the indemnitor 

. . . as an additional assured under its liability policies, must first exhaust the 

insurance it agreed to obtain before seeking contractual indemnity.” Tullier v. 

Halliburton Geophysical Servs., Inc., 81 F.3d 552, 553 (5th Cir. 1996); see also 

Klepac v. Champlin Petroleum Co., 842 F.2d 746, 747–48 (5th Cir. 1988). 

In Ogea, the Fifth Circuit held that contractor Loffland Brothers’ insurance 

obligation must be exhausted before Phillips Petroleum Company’s indemnity 

obligation was triggered. 622 F.2d at 190. The Fifth Circuit noted that the 

insurance and indemnity obligations in a maritime contract “must be read in 

conjunction with each other in order to properly interpret the meaning of the 

contract.” Id. The Ogea contract provided that Phillips would indemnify Loffland 

Brothers from claims by Phillips’ employees or employees of other contractors. 

Id. at 188. The contract also provided that Loffland Brothers was required to 

procure a $500,000 insurance policy and name Phillips as a co-insured. Id. at 189. 

Another contractor’s employee was injured on Phillips’ rig and sued 

Loffland, who in turn asserted a third-party indemnity claim against Phillips. Id. at 
9

187. Phillips asserted a counter-claim against Loffland, alleging that Loffland was 

obligated to obtain liability insurance covering Phillips and that Loffland’s 

insurance obligation primed Phillips’ indemnity obligation. Id. The district court 

rendered judgment in favor of Phillips, and the Fifth Circuit affirmed, holding that 

“[t]he indemnity provisions do not come into play” because Phillips did not have 

an obligation to indemnify Loffland until the $500,000 policy, on which Phillips 

was required to be named a co-insured, was exceeded, and it was not. Id. at 189–

90. The Fifth Circuit held that if Loffland had failed to name Phillips as a coinsured, then Loffland was liable for breach of contract up to $500,000 and Phillips 

would be relieved of liability. Id. at 189. 

Since Ogea, the Fifth Circuit has consistently held that a party “who has 

entered into a contractual indemnity provision but who also names the 

indemnitor . . . as an additional assured under its liability policies, must first 

exhaust the insurance it agreed to obtain before seeking contractual indemnity.” 

Tullier, 81 F.3d at 553; see Klepac, 842 F.2d at 747–48. 

C. Analysis

This case is controlled by Ogea. The MSA provided in Paragraph 15.B. that 

Hercules would indemnify Excell against claims by Hercules’s employees. 

Paragraph 9 provided that Excell “shall maintain at its sole expense the minimum 

insurance coverage specified in Exhibit ‘A,’” and Exhibit A provides:
10

All insurance policies shall contain a waiver of subrogation in favor of 

[Hercules], its affiliated companies, and any third parties to whom or 

for which [Hercules] is under contract or rendering services and/or its 

and their employees and agents. All insurance policies, except 

Worker’s Compensation, shall name all such parties as additional 

assureds. All such policies shall be endorsed to provide that

additional assureds shall not be liable for premiums and that such 

policies shall be primary as to additional assureds, regardless of any 

“excess” or “other insurance” clauses therein. The coverage extended 

an additional assured shall not be less than that provided to the 

Contractor. All policies will cover investigation and defense of 

claims. All policies will include contractually assumed liability 

coverage.

(Emphasis added.) 

Here, “[t]he controlling fact . . . is the existence of the ‘additional assured’ 

coverage whereby [Excell] agreed to procure insurance coverage for the benefit of 

[Hercules].” Tullier, 81 F.3d at 554. “The import of the additional assured clause 

is emphasized here because [the MSA] also required that insurance procured by 

[Excell] must afford primary coverage to [Hercules].” Id. It also made clear that 

the policy must include contractually assumed liability coverage, and it did not 

limit the insurance requirement to liability coverage assumed by Excell. Cf.

William W. Pugh, OIL AND GAS DRILLING CONTRACTS: A LOOK AT THE MAJOR 

RISK ALLOCATION ISSUES, 2013 No. 3 ROCKY MTN. MIN. L. INST. Paper No. 10, 15

(2013) (under Ogea, “when there are conflicting indemnity and insurance 

requirements, the insurance of the indemnitee must first respond up to the dollar 

limit of coverage. Only then must the indemnitor honor its hold harmless 
11

obligation. In practice, this situation may be eliminated by the addition of a 

sentence limiting the applicability of the additional assured requirement to the 

risks and liabilities assumed by the party providing the insurance coverage.”) 

(emphasis added). 

Excell argues that this case is distinguishable from Ogea because there, the 

parties specifically negotiated the additional assured provision and agreed that the 

indemnity obligation would not come into play until after the additional assured 

insurance was exhausted, while here the parties did not. But the Fifth Circuit has 

rejected a nearly identical argument. In Tullier v. Halliburton Geophysical 

Services, Inc., 81 F.3d 552 (5th Cir. 1996), the Fifth Circuit held that whether the 

parties “directly negotiated [the] result . . . is not controlling,” because the “legal 

imperative” is to “read the indemnity and insurance procurement provisions 

harmoniously.” 81 F.3d at 554 (holding that insurance obligation was primary to 

indemnity obligation).

Excell also argues that Hercules’s interpretation ignores key provisions of 

the MSA, such as Paragraph 15.D., which requires the parties to carry their own 

insurance for indemnity obligations. Specifically, Paragraph 15.D. provides: “[a]ll 

indemnities under this Agreement [] shall be supported by equal amounts of 

available liability (or other appropriate) insurance to be carried by the 

indemnifying party at its own expense.” But again, Tullier considered and rejected 
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a similar argument, concluding that the indemnitor’s obligation was to secure 

coverage for liability in excess of the coverage under the additional assured 

provision. The Tullier contract required the contractor to “supply primary 

coverage up to $1,000,000 per incident, with [the company] as an additional 

assured.” Id. at 554. The Fifth Circuit held that the company, therefore, 

“contracted to insure liability over that amount in fulfillment of its indemnity

responsibility.” Id. Similarly, here, Paragraph 15.D. required Hercules to procure 

insurance to support its indemnity obligation, but that insurance is not triggered 

until after the limits of insurance that Excell agreed to purchase under Paragraph 9 

and Exhibit A are exhausted. See id. 

Excell further argues that Paragraph 15.E should be interpreted to mean that 

the indemnity provisions apply notwithstanding anything else contained in the 

MSA. Essentially, Excell argues that Paragraph 15.E means that indemnities 

trump all other provisions of the MSA. But Paragraph 15.E does not say this. It 

provides: 

The allocations of risk contained in this Paragraph 15 or elsewhere in 

this agreement shall apply notwithstanding the simple, gross, sole, 

joint or concurrent negligence of any person or party (regardless of 

whether such person or party is an indemnitee or not), the 

unseaworthiness or other fault of any vessel, “ruin,” or strict liability, 

liability imposed by statute, defects in premises, equipment or 

material, or any other event or condition whether anticipated or 

unanticipated and regardless of whether pre-existing this agreement.
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This provision gives effect to the indemnities regardless of whose negligence or 

gross negligence caused the injury; it is designed to allow the indemnities to 

survive the express negligence rule, not to trump every other provision of the 

MSA. Moreover, several courts following Ogea and its progeny have rejected the 

argument that this type of provision causes the indemnities to trump a party’s 

obligation to procure primary insurance for an additional assured. See, e.g., Basin 

Exploration, Inc. (Del.) v. Ocean Salvage Corp., No. Civ.A. 01-526, 2003 WL 

943642, at *4–5 (E.D. La. March 7, 2003) (contractor was required to exhaust 

insurance coverage required under parties’ MSA before seeking indemnity where 

indemnity provision provided for indemnity “notwithstanding anything else in this 

contract”); Sonat Exploration v. Falcon Drilling, Co., 85 F. Supp. 2d 649, 654 

(W.D. La. Sept. 23, 1999) (contract providing for allocation of risk 

“[n]otwithstanding said insurance provisions” did not abrogate insurance 

requirements of contract; insurance requirements primed indemnity).

Excell relies primarily on three cases to support its interpretation of the 

MSA: Spell v. N.L. Industries, Inc., 618 So. 2d 17 (La. App. 3rd Cir. 1993),

Helmerich & Payne International Drilling Company, 180 S.W.3d 635 (Tex. 

App.—Houston [14th Dist.] 2005, no pet.), and Brusco Tug & Barge, Inc. v. St. 

Paul Fire and Marine Ins. Co., 897 F. Supp. 2d 1048 (W.D. Wash. 2012). But, for 

various reasons, none of these cases carries the day. 
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The Fifth Circuit has determined that the analysis in the first of these, Spell,

“is inconsistent with that of the Fifth Circuit in Ogea . . . .” Tullier, 81 F.3d at 552 

n.1. Spell was also decided under Louisiana law, not federal maritime law. It thus 

is of little value to this case. Id. (“Spell was decided under Louisiana law, whereas 

the case before us involves federal maritime law, Spell is not controlling and will 

not be further discussed.”). 

In Helmerich, the Fourteenth Court of Appeals held that an indemnity 

provision was primary in a contract that provided that the indemnity provision 

applied “[n]otwithstanding anything to the contrary contained herein.” Helmerich, 

180 S.W.3d at 638–39. But the MSA at issue in this case contains no such 

provision. Additionally, the Fourteenth Court applied Texas law, not federal 

maritime law, as the parties acknowledge we are required to do here. See id. at 

637. 

In the third case Excell relies upon, Brusco Tug, the contract expressly stated 

that certain types of indemnification applied, notwithstanding the contract’s 

insurance requirements:

Notwithstanding the foregoing provisions as to insurance, liability and 

indemnity, the parties agree that with respect to their employees, or 

the employees of their subcontractors, each shall assume liability for, 

indemnify and hold harmless (including legal costs and fees) from, 

and procure contractual liability or other insurance with respect to, 

any loss, damage, claim, liability and/or suit arising out of or relating 

to bodily injury to their employees or the employees of their 

subcontractors.
15

Brusco Tug, 897 F. Supp. 2d at 1050. The MSA contains no analogous language.

Finally, at oral argument, Excell argued that Hercules’s interpretation of the 

MSA is flawed because it would permit Hercules to claim coverage under Excell’s 

insurance for incidents entirely unrelated to Excell’s work. We disagree. We note, 

first, that in this instance, Hercules is seeking coverage for Brunson’s injuries, 

which allegedly arose as a result of a free fall in an elevator that Excell had 

certified for use only 50 days earlier. In any event, we do not agree that adopting 

Hercules’s interpretation of the MSA would allow Hercules to seek coverage under 

Excell’s policy for damages unrelated to Excell’s work, because the MSA limits 

the scope of the agreement such that the insurance referenced in Paragraph 9 could 

apply only to work by Excell, its affiliates, and its subcontractors for Hercules or 

its affiliated companies. 

Accordingly, following well-settled Fifth Circuit maritime law, we conclude 

that Hercules is not obligated to indemnify Excell under Paragraph 15 of the MSA 

until the limits of insurance coverage that Excell was obligated to purchase by 

Paragraph 9 and Exhibit A of the MSA have been exhausted. See Ogea, 622 F.2d 

at 189–90; Klepac, 842 F.2d at 747–48; Tullier, 81 F.3d at 553–54. We therefore 

hold that the trial court erred in granting Excell’s summary judgment and denying 

Hercules’s summary judgment as to the interpretation of the MSA. 
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D. Res Judicata and Collateral Estoppel

After briefing in this appeal was complete, Excell sought leave to file a 

supplemental brief in which it argued that the doctrines of res judicata and 

collateral estoppel preclude further litigation and that Excell is entitled to judgment 

in its favor. The basis of the argument is that a Louisiana state court adjudicated 

the same issue presented in this case and entered a final judgment in Excell’s favor. 

The Louisiana case arose from the same incident. Currey, who was injured in the 

same elevator accident as Brunson, sued in Louisiana, and Excell and Hercules 

litigated in Louisiana the very same insurance and indemnity issues presented in 

this appeal. 

No collateral estoppel or res judicata defense was raised in the trial court 

below because the Louisiana judgment only became final while this appeal has 

been pending. Nevertheless, Excell argues in its supplemental brief that it is not 

too late for the preclusion principles to be applied and that, in fact, we are required 

to enter judgment in its favor now that the Louisiana judgment is final. Hercules 

responds that res judicata and collateral estoppel are affirmative defenses that must

be pleaded and proved and may not be raised for the first time on appeal, and that 

applying these doctrines in this case would be unfair.
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1. Applicable Law

Because the final judgment upon which Excell relies was rendered by a 

Louisiana court, Louisiana law governs its res judicata and collateral estoppel 

effect. See Purcell v. Bellinger, 940 S.W.2d 599, 601 (Tex. 1997) (court of 

appeals erred in applying Texas law in determining res judicata effect of New York 

state court judgment; proper question was whether New York judgment would 

have preclusive effect on Texas suit if it had been brought in New York); 

Monsanto Co. v. Davis, 25 S.W.3d 773, 787 (Tex. App.—Waco 2000, pet. dism’d 

w.o.j.) (because final judgment was rendered by Louisiana state court, Louisiana

law governed its res judicata effect); Villanueva v. Office of Atty. Gen., 935 S.W.2d 

953, 956 (Tex. App.—San Antonio 1996, writ denied) (res judicata effect of 

Indiana trial court order determined by applying Indiana law). While Louisiana 

substantive law controls the effect of the Louisiana judgment, “Texas procedural 

rules control how that effect is determined.” Monsanto, 25 S.W.3d at 787.

2. Analysis

We agree with Hercules that we should decline to apply res judicata and 

collateral estoppel. While Louisiana substantive law controls the effect of the 

Louisiana judgment, “Texas procedural rules control how that effect is 

determined.” Monsanto, 25 S.W.3d at 787. In Texas, res judicata and collateral 

estoppel are affirmative defenses that are waived if not raised in the trial court, and 
18

cannot be raised for the first time on appeal. See Sysco Food Servs., Inc. v. 

Trapnell, 890 S.W.2d 796, 802 (Tex. 1994); Worldpeace v. Comm’n for Lawyer 

Discipline, 183 S.W.3d 451, 458–59 (Tex. App.—Houston [14th Dist.] 2005, pet. 

denied). It is undisputed that Excell did not plead and prove the defenses in the 

trial court and that the trial court never considered Excell’s arguments regarding 

res judicata or collateral estoppel: they were raised for the first time in Excell’s 

supplemental brief, which it filed after briefing in this appeal was complete. 

We recognize that Excell could not raise these defenses in the trial court 

because the Louisiana judgment did not become final until the Louisiana Supreme 

Court denied Hercules’s writ application in February 2014, when this case was 

already on appeal. But we may not affirm a summary judgment on a ground not 

included the motion. See Stiles v. Resolution Trust Corp., 867 S.W.2d 24, 26 (Tex.

1993) (trial court may not grant summary judgment on ground not included in 

summary-judgment motion, and appellate court may not affirm summary judgment 

on ground not included in motion). The trial court was not asked—nor could it 

have been asked—to render a judgment based upon res judicata or collateral 

estoppel. On the record it had before it at the time it granted summary judgment, 

the trial court should have granted summary judgment for Hercules on the contract 

interpretation issue. Accordingly, we decline to hold that the Louisiana judgment 

has preclusive effect in this case. See Stiles, 867 S.W.2d at 26.
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Conclusion

We reverse the trial court’s summary judgment in favor of Excell and render 

judgment granting Hercules summary judgment with respect to liability on its 

breach of contract claim. Although Hercules requested rendition on all issues in its 

brief, it conceded at oral argument that we cannot render judgment on damages

because it did not conclusively prove them. Accordingly, we remand to the trial 

court to determine the amount of Hercules’s damages and whether Excell is 

entitled to an offset, and to enter judgment accordingly.

Rebeca Huddle

Justice

Panel consists of Justices Massengale, Brown, and Huddle.