UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_______________________

No. 95-30037

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SHAWN TULLIER,

Plaintiff,

versus

HALLIBURTON GEOPHYSICAL SERVICES, INC.,

Defendant/Cross-Claimant/Cross-Defendant/Appellant.

versus

McCALLS BOAT RENTALS, INC.,

Defendant/Cross-Defendant/Cross-Claimant/Appellee.

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Appeals from the United States District Court

for the Western District of Louisiana

_________________________________________________________________

April 25, 1996

Before WISDOM, GARWOOD, and JONES, Circuit Judges.

EDITH H. JONES, Circuit Judge:

The contracting parties to a time charter for a vessel

used in the offshore oil and gas industry agreed to indemnify each

other for job-related liabilities and to back up the crossindemnity provisions with insurance. Their dispute involves which

comes first, the “additional assured” coverage of McCall Boat

Rentals, Inc., or Halliburton Geophysical Services’ indemnity

obligation. Following established caselaw in this circuit, we hold

that th e “additional assured” coverage must be exhausted before2

HGS’s indemnity responsibility is called into play. It is

therefore nec essary to reverse the district court’s contrary

decision and remand for further proceedings.

BACKGROUND

Shawn Tullier, an HGS empl oyee, slipped and fell in a

pool of water while working in the galley of McCall’s vessel M/V

JOYCE McCALL. Tullier sued and settled with HGS and McCall,

triggering this controversy under t he parties’ time charter

agreement. McCall and HGS had each agreed broadly to indemnify and

defend the other part y from and against claims brought by or on

behalf of the indemnitor’s employees. Time Charter Agreement

¶¶ 5.11.1 and 5.11.2. While the cross-indemnity provisions are for

our purposes identical, the parties agreed to treat the insurance

provisions backing up their indemnities quite differently. HGS was

required “to insure the liabilities it assumes under this Time

Charter with a manuscript comprehensive general liability coverage

with appropriate maritime endorsements.” ¶ 6.4. McCall, however,

agreed to provide insurance as follows:

5.9 (b) Protection and Indemnity (P&I) insurance on

SP-23 formto at least the full value of the

vessel with minimum limits equal to

$1,000,000.00 per occurrence. The P&I policy

shall

. . . be en dorsed to amend the

sistership clauses to provide full coverage

for Additional Assureds for claims involving

vessels or equipment owned, chartered or involving vessels or equipment owned,

chartered or otherwise controlled by OWNER or

Additional Assureds, and to provide

contractual liability coverage covering the

obligations of OWNER to HGS under time

charter, and to delete the “as owner”

limitations a s respects the Additional3 Assureds to underwriters against claims by the

Additional Assureds. . . .

(e) Comprehensive General Liability insurance )or

equivalent third party liability insurance)

with bodily injury and property damage limits

of $1,000,000.00 per accident or occurrence.

Follow form excess liability insurance shall

be obtained to provide single limit coverage of no less than $5,000,000.00 per occurrence.

5.9.1 On all policies of insurance referred to

abo ve, OWNER (McCall) shall obtain

e ndorsements from its underwriters providin g

that HGS

. . .shall be named by endorsement as

Additional Assureds.

5.9.2 All such insurance required herein shall be

endorsed to provide that the insurance

provided thereby shall be primary insurances,

as respects to the Additional Assureds,

irrespective of any “excess” or “other

insurance” clauses contained therein.

Thus, McCall’s insurance was intended specifically to cover HGS as

an additional assured, to delete the “as owner” limitations with

respect to HGS, and to constitute primary coverage fo r the

additional assureds.

Based on these provisions, McCall cross-claimed against

HGS for defense and contractual indemnity for Tullier’s settlement,

and Halliburton cross-claimed against McCall for breach of the time

charter because of McCa ll’s alleged failure to provide insurance

for HGS. (Each party had incurred costs in defending the Tullier

claim.) The district court, ruling on cross-motions for summary

judgment, approved McCall’s position that because HGS was obliged

to indemnify McCall's for injuries to HGS’s employee, HGS could not

rely on McCall’s insura nce -- through the additional insured

provision

-- to fulfill its responsibility. The court relied onSpell ’s analysis is inconsistent with that of the Fifth Circuit in

Ogea v. Loffland Broth ers Co. , 622 F.2d 186 (5th Cir. 1980), but as S pell was

decided under Louisiana law, whereas the case before us involves federal maritime

law, Spell is not controlling and will not be further discussed.

4 two cases, Wilson v. JOB, Inc. , 958 F.2d 653 (5th Cir. 1992), and

S pell v. NL Industries, Inc. , 618 So.2d 17 (La. App. 3rd Cir.

1 993). 1 Judgment was entered against HGS for McCall’s indemnity

and defense costs. HGS has appealed the judgment for McCall’s and

the rejection of its cross-claim for breach of contract.

DISCUSSION

In a line of cases commencing with O gea v. Loffland

Brothers C o. , 622 F.2d 186 (5th Cir. 1980), this court has held

that a party such as McCall, who has entered in to a contractual

indemnity provision but who also names the indemnitor, here HGS, as

an additional assured under its liability policies, must first

exhaust the insurance it agreed to obtain before seeking

contractual indemnity. S ee also, Klepac v. Champlin Petroleum Co.

,

842 F.2d 746 (5th Cir. 1988), rehearing denied 844 F.2d 788 (1988);

Woods v. Dravo Basic Materials Company

, 887 F.2d 618 (5th Cir.

1989). O gea held that the insurance procurement and indemnity

provisions of a drilling contract “must be read in conjunction with

each other in order to properly interpret the meaning of the

contract.” Ogea , at 190. The court continued:

By so doing, it is clear that the parties

intended that Phillips would not be held

liable for injuries incurred on its off-shore

platform up to $500,000.00. The insurance to

be acquired and maintained by Loffland would

cover such damages. For damages in excess of

$500,000.00, the indemnity provisions would

come into effect. Because Ogea’sFor all unpublished opinions rendered after January 1, 1996, however,

the court has determined tha t such opinions will no longer have precedential

value. See Fifth Circuit Local Rule 47.5.1.

5 claim

. . . and actual settlement are both

less than $500,000.00, Phillips should not

incur any liability. The indemnity provisions

do not come into play. Id . at 190.

Shortly after this case was orally argued, another panel of this

court affirmed a district court decision that relied on Ogea to

interpret cross-indemnity and insurance procurement clauses in an

HGS time charter that are nearly identical to those before us.

LeBlanc v. Halliburton Geophysical Services, Inc. , No. 95-30501

(5th Cir. 1995) (summary calendar). When L eBlanc was issued, it

became a precedential decision in our circuit. 2 L eBlanc i s

dispositive of this case. But because similar disputes seem to

arise regularly, it is useful briefly to recapitulate the reasoning

that s upports application of the O gea principle even where both

parties have insured their indemnity obligations.

McCall seeks to distinguish Ogea on two grounds and to

gain support from it on one. First, in O gea

, the only insurance

obligation under the contract required Loffland (the party entitled

to indemnity) to secure insurance for Phillips (the indemnitor) as

an additional assured. But here, McCall points out, HGS, the

indemnitor, agreed to cover its liabi lity under the time charter

agreement by purchasing insurance. Second, O gea stat es that

Phill ips specifically negotiated the obligation of L offland to

procure insurance for Phill i ps, whereas no similarly specific

bargain was struck with HGS. Taking advantage of O gea

, however,6

McCall observes that the opinion criticized Loffland’s emphasis on

the mutual indemnity clauses to the exclusion of the insurance

purchase clause of the parties’ contract. Similarly, according to

McCall, HGS hopes to enforce the insu rance procurement provision

imposed on McCall while ignoring its own contractual liability to

furnish insurance.

These distinctions are not persuasive. The controlling

fact in Ogea, as in this case and in LeBlanc, Klepac

, and Woods is

the exis tence of “additional assured” coverage whereby an

indemnitee agreed to procure insurance coverage for the benefit of

the indemnitor. The import of the additional assured clause is

emphasized here becaus e the time charter also required that

insurance procured by McCall must afford primary coverage to HGS.

The time charter could hardly have been more specific in protecting

HGS’s indemnity obligation by means of McCall’s insurance.

The fact that the parties may not have directly

negotiated this result, as they apparently did in Ogea

, is not

controlling. O gea rests on the legal imperative to read the

indemnity and insurance procurement provisions harmoniously. O gea,

supra at 190. Moreover, as HGS notes, it is not unfair for

McCall’s additional assured coverage to bear HGS’s in demnity

oblig ation here because, if McCall complied with the insurance

procurement provision, it could have charged HGS for the enhanced

insurance coverage as part of its daily rental rate. HGS paid for

the insurance one way or another.7 Finally, this interpretation of the insurance procurement

provi sion does not ignore HGS’s agreement to “insure the

liabilities it assumes” under the contract. McCall was required to

supply primary coverage up to $1,000,000 per incident, with HGS as

an additional assured. HGS, therefore, contracted to insure

liabilities over that amount in fulfillment of its in demnity

responsibility. All provisions of the HGS-McCall time charter are

integrated by the O gea-LeBlanc reasoning that the unilateral

insurance procurement provision precedes the indemnity requirement

of the contract.

Like the district court, McCall also relies on Wilson v.

JOB, Inc., supra

, a case that interpreted reciprocal indemn ity

provisions and mutual insurance requirements. W ilson did not cite

Ogea, Klepac or Wood , and it is distinguishable from those cases.

The indemnity provisions in Wilson required the c harterer of the

vessel to hold the owner harmless for claims arising directly out

of the charterer’s “actual drilling operations”. Id . at 655. In

addition, the charterer was required to procure insur ance to

protect the owner for liability o nly with respect to “actual

drilling operations.” W ilson

, at 658. In mirror-image provisions,

the vessel owner was required to indemnify the charte rer and

procure insurance for the charterer’s benefit with respect to

“vessel operations.” The insurance policies obtained by each party

could not satisfy the other’s indemnity obligation. The

interrelationship and substance of the indemnity and insurance8

clauses in Wilson cannot be compared with the dissimilar provisions

between HGS and McCall.

Ogea and its progeny most appropriately guide the

resolution of this case, even though HGS as well as McCall

undertook an obligation to insure liabilities under the time

charter. HGS’s insurance obligation, however, like its indemnity

duty, was qualified by the provision requiring McCall to name HGS

as an additional assured and to render that insurance as primary

coverage.

For these reasons, the district court erred in granting

McCall’s summary judgment motion while denying HGS’s deman d for

insurance coverage from McCall and dismissing HGS’s cross-claim for

breach of contract in the event McC all did not comply with its

obligation to obtain such insurance. The record is not clear as to

whether McCall purchased the appropriate insurance or what remedy

is due to HGS. Consequently, we must remand for the district court

to conduct further proceedings on HGS’s cross-claim.

CONCLUSION

For the foregoing reasons, the judgment of the district

court in favor of McCall is REVERSED

, and the case is REMANDED for

further proceedings consistent herewith.