IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 08-40322

Lexington Insurance Company, 

As Assignee of Ann M. Wells

Plaintiff-Appellant

v.

S.H.R.M. Catering Services, Inc. 

a/k/a Eurest Support Services

Defendant-Appellee

Appeal from the United States District Court 

for the Southern District of Texas

Before GARWOOD, GARZA, and OWEN, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiff-appellant, Lexington Insurance Company (Lexington), as

assignee of Ann Wells (Wells), sued Defendant-appellee, S.H.R.M. Catering

Services, Inc., a/k/a Eurest Support Services (Eurest), based upon injuries Wells

sustained while employed by Eurest. Eurest filed a Rule 12(b)(6) motion to

dismiss the suit, arguing that the assignment was invalid. The district court

granted the motion and dismissed Lexington’s claim. Lexington now appeals the

district court’s grant of Eurest’s motion to dismiss. For the following reasons,

we affirm.

United States Court of Appeals

Fifth Circuit

F I L E D

May 4, 2009

Charles R. Fulbruge III

Clerk
Specifically, Wells stated early on that a Eurest co-worker was partly responsible 1

for her slip and fall by applying excess wax to the floor and failing to place a warning sign. 

She also stated that Eurest employees had improperly stacked the boxes which fell and

injured her. This information was also available in the accident reports.

2

FACTS AND PROCEEDINGS BELOW

Eurest provides catering and janitorial services for offshore rigs. Wells,

a Eurest employee, was assigned to work as a cook on the M/V OCEAN

LEXINGTON, a semisubmersible drilling rig owned and operated by Diamond

Offshore Drilling Services, Inc. (Diamond). Wells was injured on two separate

occasions while working aboard the OCEAN LEXINGTON, once after she

slipped and fell in wet wax in a hallway and a second time after boxes fell on her

in the vessel’s storage area. On June 30, 2005, Wells sued Diamond in federal

district court to recover for her injuries. As Wells’s employer, Eurest had a

Master Service Agreement with Diamond that required Eurest’s Commercial

General Liability carrier, Lexington, to defend and indemnify Diamond against

Wells’s claims. 

From the beginning, both parties had access to information suggesting

Eurest shared liability for Wells’s injuries. However, Wells did not name Eurest 1

in her suit, and Diamond did not move to join Eurest as a third-party defendant

until April 18, 2006, more than nine months after Eurest brought suit and less

than two months prior to the parties’ set trial date. Wells opposed the motion

as untimely, and the district court dismissed the motion as being without merit.

Diamond did not attempt to appeal or otherwise seek review of the ruling, but

instead reached a settlement agreement with Wells. As part of the settlement,

Wells agreed to assign to Lexington all of her claims against Eurest. Diamond

notified the district court that a settlement had been reached, and the district

court dismissed Wells’s claims against Diamond with prejudice. The release
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agreement did not name Eurest among the released parties. Later, Lexington,

as Wells’s assignee, brought the present suit against Eurest. Eurest filed a

motion to dismiss Lexington’s claims, and the district court ruled that the

assignment of unliquidated personal injury claims was invalid under federal

maritime law and dismissed Lexington’s suit pursuant to Rule 12(b)(6).

Lexington timely filed this appeal.

DISCUSSION

Lexington argues that the district court erred in concluding that the

assignment of Wells’s unliquidated personal injury claim was invalid under

federal maritime law and, thus, the court improperly dismissed Lexington’s

claims under Rule 12(b)(6). Dismissals under Rule 12(b)(6) are reviewed de

novo. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). 

To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead “enough

facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.

Twombly, 127 S.Ct. 1955, 1974 (2007). “Factual allegations must be enough to

raise a right to relief above the speculative level on the assumption that all the

allegations in the complaint are true (even if doubtful in fact).” Id. at 1965

(quotation marks, citations, and footnote omitted). Because Lexington's

complaint is premised on the permissibility of an assignment of unliquidated

personal injury claims, this court must affirm the district court’s dismissal if

such assignments are invalid. 

This court has not yet addressed the issue of whether such assignments

of unliquidated tort personal injury claims are generally permissible under

federal maritime law. In the absence of any direct authority, admiralty courts

may look to the common law for guidance. Casino Cruises Inv. Co., L.C. v.

Ravens Mfg. Co., 60 F. Supp. 2d 1285, 1287 (M.D. Fla. 1999). Under the common

law and the law of most states, “personal injury claims are not assignable absent
4

a statute to the contrary.” Id. This common law bar was intended to prevent the

“evils of champerty and maintenance.” Id. (quoting Hospital Serv. Corp. v.

Pennsylvania Ins. Co., 101 R.I. 708, 712 (1967)). 

Lexington argues, however, that concerns regarding champerty and

maintenance are outdated and without merit—as evidenced by state law

exceptions to the common law prohibition and this court’s approval of Mary

Carter Agreements. While Lexington’s argument may have some merit, this

court will generally follow the common law bar unless good reason instructs us

otherwise. And, in this instance, federal maritime law persuades this court to

adhere to the common law prohibition of such assignments. 

The proportionate liability framework for general maritime tort law, as

established in McDermott Inc. v. AmClyde, 114 S.Ct. 1461 (1994), is instructive.

Under this framework, a tortfeasor is ultimately liable only for his proportionate

share of fault. Id. at 1465. In the event of settlement, a settling tortfeasor is

presumed to pay only for his proportionate liability, non-settling tortfeasors

receive no credit for the amount paid by a settling tortfeasor, and contribution

actions by non-settling tortfeasors against a settling tortfeasor are barred. Id.

at 1466, 1470–71. 

In Ondimar Transportes Maritimos v. Betty Street, 555 F.3d 184 (5th Cir.

2009), we recently addressed the effect of McDermott on a settling tortfeasor’s

suing a non-settling tortfeasor for property damage on the basis of an

assignment of the property damage claim from the injured party in the

settlement. We noted that the assignment would be invalid “if the assignment

of property damage tort claims is either (a) generally prohibited by law or (b)

generally permitted by law but barred by application of McDermott and

Murphy[v. Florida Keys, 329 F.3d 311 (11th Cir. 2003)] principles.” Id. at 187.
We note that in Ondimar the injured party and the co-tortfeasor was apparently at 2

all relevant times subject to service of process by the settling tortfeasor. It is true that the

settling tortfeasor there was under pressure to settle within 30 days of demand or be

precluded by the relevant tariff under 46 U.S.C. § 40501(f) from use of the port facilities of

the injured party. Id. at 185-86. However, nothing in Ondimar suggests that it could not

have, for example, brought a declaratory action against the injured party and co-tortfeasor,

paying the funds demanded into the registry of the court or under protest or the like.

5

We declined to decide “whether the assignment of property damage tort claims

are generally prohibited,” although we observed that it appeared “most state

courts . . . permit such assignments.” Id. We stated in this connection that “we

look to the common law as a ‘guide to interpretation of federal admiralty

principles’,” citing Casino Cruises Inv. Co., L.C.. Id. at 187 n.2. We went on to

hold, however, that even if the assignment of property damage tort claims were

generally permitted, “there are good reasons for imposing certain limitations in

the context of McDermott’s proportionate fault framework.” Id. at 188. We held

that “permitting assignment under these circumstances would not further the

primary goals of McDermott: ‘consistency with the proportionate fault approach

. . . promotion of settlement, and judicial economy,’” quoting McDermott, and

“such assignments will lead to costlier, longer, and more confusing suits, all of

which would undermine McDermott’s goal of promoting judicial economy.” Id.

at 189. We therefore held: “We adopt the rule for the general maritime law that

the assignment of tort claims from the injured party to one tortfeasor permitting

the settling defendant to proceed against a co-tortfeasor is invalid.” Id.

2

Ondimar controls. Under these circumstances the assignment from Wells

to Lexington is invalid to authorize the latter’s suit against Eurest. 

We recognize, as does Ondimar, see id. at 188 n.3, that where the injured

party has released not only the settling tortfeasor but also the non-settling

tortfeasor, that an action by the settling tortfeasor against the non-settling
6

tortfeasor for contribution is less inconsistent with McDermott’s goals than the

situation presented in the present case, and in Ondimar, where the injured

party never released the non-settling tortfeasor. On the other hand, the

McDermott advantages of judicial economy and clearer presentation argue in

favor of having proportionate fault and the extent of damages determined in one

proceeding with all relevant parties present, at least where that is reasonably

possible.

Lexington also argues that federal maritime law authorizing the use of

Mary Carter Agreements supports the enforcement of the Wells-Lexington

assignment. Lexington argues that, while its assignment is not itself a Mary

Carter agreement, there is no material distinction between the assignment at

issue and those contained in Mary Carter agreements, which have frequently

been approved by the court. This argument, however, is unpersuasive. 

While Mary Carter Agreements bear some resemblance to an assignment

of unliquidated personal injury claims, the two are quite distinct. This court has

defined Mary Carter Agreements generally as “a secret contract between the

plaintiff and one of several defendants whereby the contracting defendant will

settle with the plaintiff before trial, but must remain in the suit, and will be

reimbursed to some specific degree from the plaintiff’s recovery from the other

defendants.” McDaniel v. Anheuser-Busch, Inc., 987 F.2d 298, 309 n. 49 (5th Cir.

1993); see, e.g., Bass v. Phoenix Seadrill/78, Ltd., 749 F.2d 1154, 1156 (5th Cir.

1985); Wilkins v. P.M.B. Sys. Eng’g, Inc., 741 F.2d 795, 796–97 (5th Cir. 1984).

Lexington finds fault with this court’s characterization of such Agreements as

reimbursements, and correctly points out that this court has frequently referred

to such Agreements as “assignments.” See, e.g., Bass, 749 F.2d at 1158; Wilkins,

741 F.2d at 798. But Lexington fails to recognize that Mary Carter Agreements,

rather than involving the assignment of an entire claim, embody only the
This court does not speak to circumstances which would leave a party without a 3

remedy to litigate the matter as a single case, e.g. circumstances in which a third party

was not subject to process during the initial suit.

7

assignment of a partial interest in a plaintiff’s recovery. Fundamentally, they

are best characterized as a reimbursement, requiring a settling defendant to pay

the plaintiff a certain sum (often to help finance the suit), both parties remaining

in the action, and if the plaintiff is successful, the settling defendant is entitled

to a portion of any recovery (or any over a stated amount) that the plaintiff

receives from the non-settling defendant. 

In the case at hand, the Wells-Lexington assignment, unlike a Mary

Carter Agreement, involves the assignment of an entire claim, not simply a

partial interest in Wells’s ultimate recovery from Eurest. It requires a second

lawsuit, in which Lexington must act as a surrogate plaintiff and litigate the

claims of an individual who is entirely absent from the suit. This absence of the

injured party is a fundamental distinction between this assignment and those

involved in Mary Carter Agreements, where the plaintiff remains to prosecute

his own claims. See Bass, 749 F. 2d at 1156; Wilkins, 741 F.2d at 798. Allowing

this form of separate action for contribution or indemnity, even when supported

by an assignment, not only undermines the proportionate liability rule as

established in McDermott, but it also ignores the value of having all parties

before the court simultaneously in a single case. 

Lexington claims, however, that there was no opportunity to handle

Wells’s claims in a single case with all responsible parties simultaneously before

the court. This argument is incorrect. Under the present facts, a remedy was

available to Lexington in the form of a Rule 14(c) joinder motion. Wells’s 3

complaint was filed against Diamond on June 30, 2005. Early on, Lexington was

aware that Eurest might share responsibility for Wells’s injuries and had the
Lexington also argues that this court should consider making an exception to the 4

common law prohibition on assignments of personal injury claims. In particular,

Lexington points to DeSenne v. Jamestown Boat Yard, Inc., 781 F. Supp. 866 (D.R.I. 1991),

where the Rhode Island district court upheld the assignment of a maritime personal injury

claim. We find this case unpersuasive because the assignment was upheld under

extraordinary circumstances. In DeSenne, the assignor was attempting to renege on the

assignment she made after a settlement agreement had already been reached between the

assignee and the remaining tortfeasor. Undoubtedly, applying the common law bar in that

instance would have resulted in extreme injustice by allowing a joint tortfeasor to remain

liable to a tort victim after believing itself to have been released from all liability through a

settlement agreement made with another party.

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opportunity to file a timely Rule 14(c) motion to join Eurest as a co-defendant.

Unfortunately, Lexington did not file its Rule 14(c) motion until April, 18, 2006,

less than two months prior to the parties’ set trial date. Wells opposed the

motion, objecting to its untimeliness, among other things, and the district court

dismissed the motion as being without merit. Had Lexington timely filed a Rule

14(c) motion, Eurest could have been joined as a co-defendant, thereby placing

all joint tortfeasors before the court simultaneously.

4

CONCLUSION

For the foregoing reasons, we hold that the Wells-Lexington assignment

is invalid and, thus, the district court’s February 28, 2008 order dismissing the

suit is

AFFIRMED.