REVISED July 11, 2017

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 16-30456

INTERNATIONAL MARINE, L.L.C.; INTERNATIONAL OFFSHORE 

SERVICES, L.L.C., 

 Plaintiffs - Appellants 

TESLA OFFSHORE, L.L.C., 

 Intervenor Plaintiff - Third Party Plaintiff - Appellant 

v. 

INTEGRITY FISHERIES, INCORPORATED; SEA EAGLE FISHERIES, 

INCORPORATED, 

 Defendants – Appellees 

NATIONAL SECURITY FIRE AND CASUALTY COMPANY; ATLANTIC 

SPECIALTY INSURANCE COMPANY; ONE BEACON INSURANCE 

COMPANY; NEW YORK MARINE AND GENERAL INSURANCE 

COMPANY, 

 Third Party Defendants - Appellees 

Appeals from the United States District Court 

for the Eastern District of Louisiana 

Before SMITH, ELROD, and HAYNES, Circuit Judges. 

HAYNES, Circuit Judge: 

United States Court of Appeals

Fif h Circuit

FILED

June 21, 2017

Lyle W. Cayce

Clerk

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International Marine, L.L.C., International Offshore Services, L.L.C. 

(collectively “International”), and Tesla Offshore, L.L.C. (“Tesla”), appeal the 

district court’s grant of summary judgment dismissing their indemnity and 

insurance claims.1 For the reasons explained below, we AFFIRM in part and 

VACATE and REMAND in part. 

I. Background 

This case involves an allision in the Gulf of Mexico causing significant 

damage to a submerged mooring line for the M/V NAUTILUS (the 

“NAUTILUS”), a mobile offshore drilling unit used by Shell Offshore, Inc. 

(“Shell”), to conduct drilling operations. The principal dispute before this court 

concerns whether third parties are contractually obligated to pay for that

damage. 

Tesla, an offshore survey company, was tasked with performing an 

archaeological sonar survey in the Gulf of Mexico. To perform this survey, 

Tesla required two vessels: a larger vessel, called the “tow vessel,” and a 

smaller vessel, called the “chase vessel.” Tesla contracted with International 

to provide and operate the tow vessel, called the M/V INTERNATIONAL 

THUNDER (the “THUNDER”). As to the chase vessel, Tesla initially 

contracted with Integrity Fishers, Inc. (“Integrity”), but after Integrity’s vessel 

developed mechanical issues, Integrity substituted a different chase vessel 

owned and operated by Sea Eagle Fisheries, Inc. (“Sea Eagle”), called the F/V 

LADY JOANNA (the “JOANNA”).2 

 

1 International attempted to amend its complaint to include claims against the 

insurers, but the district court denied this amendment as “futile” in its summary judgment 

decision. This opinion refers to the claims described in International’s proposed amended 

complaint and Tesla’s claims against the insurers collectively as the “insurance claims.” On 

remand, the district court should reconsider the motion to amend.

2 The parties dispute whether Integrity was also an owner of the JOANNA. Integrity 

admitted that Charles V. Rodriguez, Sr., is president of both Integrity and Sea Eagle, and 

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The THUNDER traveled along a survey grid while towing a “towfish,” 

owned by Tesla. The towfish was attached to a cable, nearly two miles long, 

and was towed close to the bottom of the ocean, where it emitted sonar signals

and transmitted the echo of those signals to Tesla equipment on the chase

vessel. Tesla personnel, rather than the crew of the chase vessel, operated the 

Tesla equipment. At the time of the allision, the chase vessel was the 

JOANNA. According to Tesla’s party chief aboard the JOANNA, the Tesla 

tracking equipment was “our responsibility,” whereas the crew of the JOANNA 

was responsible for “driving the vessel and staying within . . . a radius of a tow 

fish.” The Tesla equipment automatically relayed the sonar signals to the 

THUNDER, which allowed the Tesla survey team to monitor the towfish and 

maintain the proper towfish position above the ocean bottom and in relation to 

the survey grid. 

The precipitating incident for this litigation was an allision between the 

towfish cable and a submerged mooring line for the NAUTILUS. Prior to the 

allision, the towfish had experienced technical problems, forcing Tesla to reel 

it onto the THUNDER for repairs. The THUNDER and the JOANNA 

temporarily went off the grid toward the south until the towfish was repaired 

and redeployed, at which point the THUNDER turned north, back toward the 

grid, followed by the JOANNA. According to International, this turn toward 

the north put both vessels on a course that brought them closer to the 

NAUTILUS. The JOANNA’s captain informed Tesla’s party chief, who was 

occupied with the Tesla equipment, that the THUNDER was getting too close 

to the NAUTILUS. The party chief then radioed the THUNDER to warn of the 

danger, but his warning was met with assurances that everything was okay. 

The party chief testified that about thirty to forty-five minutes later the towfish 

 

evidence suggests that Integrity has an insurable interest in the JOANNA. Nevertheless, 

because we affirm the dismissal of the indemnity claim, we need not resolve this dispute. 

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cable allided with the mooring line of the NAUTILUS. The JOANNA was over 

the towfish and the Tesla equipment was sending sonar signals to the 

THUNDER immediately prior to the allision. 

Shell, which was using the NAUTILUS for drilling operations when the 

allision occurred, sued Tesla and International for negligence.3 In the Shell v. 

Tesla negligence litigation, a jury awarded damages to Shell and determined 

that Tesla was 75% at fault and International was 25% at fault. In the present 

action before this court, Tesla and International claim they are entitled to 

indemnity from Integrity and Sea Eagle because the allision related to the 

operation of the JOANNA. Tesla and International additionally claim that 

they are entitled to insurance coverage because they were added as additional 

insureds on Integrity’s and Sea Eagle’s insurance policies with Atlantic 

Specialty Insurance Company/One Beacon Insurance Company (“One Beacon”) 

and New York Marine & General Insurance Company (“NY MAGIC”).4 

The contractual relationships between Tesla, Integrity, and Sea Eagle 

were set out in two master service agreements (“MSAs”). The parties agree 

that the MSAs were identical in all relevant respects, and this litigation 

focuses on two articles, Article 9 and Article 11. Article 9 provides, in relevant 

part, that the indemnitors (here, Integrity or Sea Eagle) are liable to Tesla and 

 

3 This litigation is referred to as Shell v. Tesla. 

4 This indemnity and insurance lawsuit took a circuitous route before reaching its 

present iteration. In response to Shell’s lawsuit, Tesla and International impleaded Sea 

Eagle for indemnity. Upon discovering that Integrity may have had an ownership interest 

in the JOANNA, International subsequently filed a separate indemnity lawsuit against

Integrity—which was the initiating suit for the present action before this court. The district 

court concluded that the Sea Eagle indemnity claim in Shell v. Tesla was related to the 

International lawsuit, and thus decided to consolidate the Sea Eagle indemnity claim with 

the International lawsuit. Shell v. Tesla continued as a trial on International and Tesla’s 

fault for the allision with the NAUTILUS, while the International lawsuit was used to settle 

any indemnity and insurance claims. Thus, the district court dismissed the claims against 

Sea Eagle from Shell v. Tesla and permitted them to be reasserted here, which International 

did via a second amended complaint and Tesla did via a third-party demand. Tesla then 

impleaded Sea Eagle’s and Integrity’s insurers, One Beacon and NY MAGIC. 

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its contractors for damage to third party property “arising out of or related in 

any way to the operation of any vessel owned . . . by [Integrity or Sea Eagle]

. . . to perform work under this agreement except to the extent such loss, harm, 

infringement, destruction, or damages is caused by [Tesla’s or its contractor’s] 

gross negligence or willful misconduct.” This obligation is owed “regardless of 

cause including who may be at fault or otherwise responsible under any 

contract, statute, rule or theory of law.” Article 11 requires, in relevant part, 

that Sea Eagle and Integrity provide insurance coverage for “third party claims 

arising out of or connected with the performance of Service hereunder,” and 

name Tesla and its contractors as additional insureds. The insurance 

obligations purchased under the MSAs were required to be “independent of the 

indemnity obligations contained in the contract/agreement and [to] apply 

regardless of whether the indemnity provisions contained in the 

contract/agreement are enforceable.” 

The insurers filed three motions to dismiss. The district court, however,

never explicitly decided these motions. While they were still pending, Integrity 

and Sea Eagle filed motions for summary judgment. Tesla and International 

responded with their own cross-motions for summary judgment. The district 

court granted Integrity’s and Sea Eagle’s motions and denied Tesla’s and 

International’s motions, concluding that “Shell’s claims for damages based on 

the M/V NAUTILUS incident did not arise out of, and are not related to, the 

operation of the F/V LADY JOANNA.” Furthermore, because it found that 

there was no indemnity obligation, the district court also concluded that the 

insurers did not have any obligations to Tesla or International, and it 

dismissed all claims against the insurers. Tesla and International timely 

appealed.5

 

5 In February 2016, prior to the district court’s summary judgment order, Tesla, 

International, Integrity, and Sea Eagle reached a partial settlement, but expressly reserved 

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II. Standard of Review 

We review a grant of summary judgment de novo. Int’l Marine, L.L.C. 

v. Delta Towing, L.L.C., 704 F.3d 350, 354 (5th Cir. 2013). “Summary 

judgment is appropriate when ‘there is no genuine dispute as to any material 

fact and the movant is entitled to judgment as a matter of law.’” Id. (quoting 

FED. R. CIV. P. 56(a)). The interpretation of a maritime contract is a question 

of law. Id. 

III. Discussion 

A. Indemnity Claims 

Tesla and International make two principal arguments: the JOANNA’s 

operation was “related to” the damages sustained by the NAUTILUS because 

(1) the JOANNA’s job was to position itself above the towfish, thereby enabling 

the onboard Tesla equipment to relay a sonar signal to the THUNDER for 

proper navigation; and (2) the JOANNA and the THUNDER were involved in 

a joint sonar survey operation in which the JOANNA played an essential role. 

We conclude that the summary judgment evidence supports only one finding: 

the operation of the JOANNA was independent of the negligent conduct found 

to have caused damage to the NAUTILUS. Accordingly, we affirm the district 

court’s judgment and hold that neither Sea Eagle nor Integrity owe indemnity 

under the MSAs. 

Under federal maritime law, an indemnity contract covers losses within 

the contemplation of the parties but not those which are “neither expressly 

within its terms nor of such a character that it can be reasonably inferred that 

 

the indemnity and the insurance claims. As part of that agreement, Integrity and Sea Eagle 

were given a guarantee that no uninsured judgment would be collected against them. In 

Tesla’s impleader and third-party complaint, it alleged that NY MAGIC issued a 

“Bumbershoot Policy” adding the JOANNA and providing coverage for contractual liability. 

Because of this agreement, although Integrity and Sea Eagle remain parties to this lawsuit, 

the only parties making an active defense of the district court’s order are One Beacon and 

NY MAGIC. 

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the parties intended to include them within the indemnity coverage.” Corbitt 

v. Diamond M. Drilling Co., 654 F.2d 329, 333 (5th Cir. 1981). We look to the 

contract as a whole and can only look beyond the contract if there is an 

ambiguity. Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1214 (5th Cir. 

1986). “[W]e have broadly construed language identical or similar to the 

‘arising in connection herewith’ language in [the agreement at issue] to 

unambiguously encompass all activities reasonably incident or anticipated by 

the principal activity of the contract.” Id. Though broad, however, such an 

undertaking is not limitless. Marathon Pipe Line Co. v. M/V Sea Level II, 806 

F.2d 585, 591 (5th Cir. 1986) (rejecting a construction that would “read the 

‘occurring in connection with’ language to cover a limitless number of 

unforeseeable casualties that might have occurred during the pendency of the 

construction work on [the company’s] pipeline”). When one party’s negligent 

contractual performance causes third party property damage independent of 

the alleged indemnitor’s contractual performance, indemnity is usually not 

required absent a clear indication that the parties agreed to such an unusual 

undertaking. See id.

In Marathon, we examined whether the damage in question was related 

to the services performed by the alleged indemnitor, Oceanonics, under its

contract. Id. at 590–91. We explained that the contract could not “be read in 

a vacuum to apply to any situation for which a colorable argument could be 

made that loss of property was somehow related to Oceanonics’ services under 

the contract.” Id. at 591. Instead, we held that “since Oceanonics did not 

contract to place [the vessel in question’s] anchors, the . . . indemnity provision 

created no obligation on Oceanonics’ part to indemnify [the plaintiff].” Id. 

Here, as in Marathon, Tesla and International’s negligence, as well as

the resulting damage to the NAUTILUS, was independent of the operation of 

the JOANNA. The principal activity of the contract between Tesla and 

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Integrity/Sea Eagle was for Integrity/Sea Eagle to operate the JOANNA as a 

chase vessel—i.e., to navigate the JOANNA so that it remained above the 

towfish. The MSAs are clear that the NAUTILUS’s damage must relate to or 

arise out of the operation of the JOANNA before an indemnity obligation 

arises. Nothing about the JOANNA’s successful operation as a chase vessel, 

however, related to Tesla’s decisions to redeploy the towfish near the 

NAUTILUS and take the route back toward the grid that caused an allision 

with a submerged mooring line. The undisputed evidence shows that Tesla 

and International were solely responsible for deploying the towfish, positioning 

the towfish, releasing the appropriate amount of towline dragging the towfish, 

and choosing the direction in which the towfish would travel. The JOANNA’s 

job was simply to follow the THUNDER and stay above the towfish, wherever 

it may go, which it performed successfully. Tesla’s equipment would then relay 

the position of the towfish. The JOANNA’s “involvement in such an effort—

[the sonar survey]—did not cause the accident and did not contribute to 

[Tesla’s and International’s] decision to dr[ive] the [towfish] across [the 

NAUTILUS’s mooring line].” Id. at 592.

Indemnity is not owed merely because Tesla and International were 

negligent during the survey, in the absence of the requisite connection to the 

JOANNA’s operation. See id. at 591. Although the JOANNA was still in 

operation carrying out the joint sonar survey and in position over the towfish 

at the time of the allision, its indisputably successful operation had no bearing 

on the decision to redeploy the towfish near the NAUTILUS and cross the 

NAUTILUS’s mooring line.6 Because the summary judgment evidence 

 

6 In Marathon, we observed that “potential liability” under the indemnity provision 

was limited to “accidents that might occur during [the contractor’s] performance of contract 

services.” Marathon, 806 F.2d at 591. This statement did not mean that every accident 

occurring during the contractor’s performance of contract services would trigger the 

indemnity provision. It merely meant that the potential for liability was possible only during 

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supports only the conclusion that the JOANNA’s operation made no

contribution to the negligent act causing the NAUTILUS’s damages, indemnity 

is not owed under the MSAs. See id. at 592; cf. Fontenot, 791 F.2d at 1216

(“[T]he Mesa-Rowandrill contract contemplated the operation of a heliport 

aboard the [drilling rig] and . . . Fontenot’s injuries occurred ‘in connection 

[]with’ the operation of that heliport.” (third alteration in original)). 

To be clear, we continue to subscribe to the general rule articulated in 

Fontenot that indemnity agreements containing language such as “arising out 

of” should be read broadly. See Fontenot, 791 F.2d at 1214. It is only when the 

alleged indemnitor’s contractual performance is completely independent of 

another party’s negligent act that caused damage that we apply a limitation to 

this general rule. See Marathon, 806 F.2d at 591.

In Marathon, we also concluded that a gratuitous warning by the alleged 

indemnitor to the plaintiff of potential danger did not give rise to indemnity 

liability that would not otherwise exist. Id. at 590. Similarly here, the warning 

 

the contractor’s performance of services under the contract. There are instances in which 

accidents occurring during a contractor’s performance are nevertheless independent of that 

performance. This case is one example: a joint sonar survey was underway and Integrity/Sea 

Eagle successfully performed its obligations under the contract by positioning the JOANNA 

above the towfish while another contractor negligently performed its own obligations by 

running the towfish into a submerged mooring line, and the JOANNA had no additional 

relationship to the resulting damages. Under such circumstances, no indemnity is owed 

unless the contract indicates that Integrity/Sea Eagle “agreed to such an unusual 

undertaking.” Id. In another example, if the THUNDER itself had negligently allided with 

the NAUTILUS while the joint sonar survey was still underway and the JOANNA was still 

in operation positioned above the towfish, this negligent act would be independent of the 

JOANNA’s operation. Imposing an indemnity obligation merely because of the JOANNA’s 

involvement in the ongoing joint sonar survey would create “an unusual and surprising 

obligation.” See id. (quoting Corbitt, 654 F.2d at 333).

By contrast, if the JOANNA developed a technical issue impairing its performance—

even if caused by the installation of Tesla’s equipment or the conduct of Tesla’s onboard 

crew—and third party damages arose from that technical failure, then those damages might 

arise out of or relate to the JOANNA’s operation. Similarly, if, during the sonar survey, a 

third party boarded the JOANNA to refuel it or to repair Tesla equipment, and either the 

third party’s equipment were damaged or personnel were injured, then those damages might 

arise out of or relate to the JOANNA’s operation. See Fontenot, 791 F.2d at 1214.

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from the JOANNA’s captain to Tesla’s party chief that the THUNDER was 

moving too close to the NAUTILUS was, as the district court correctly 

concluded, a gratuitous act that has no effect on the outcome of this litigation. 

See id. 

B. Insurance Claims 

The district court concluded that because the indemnity claims failed, 

the insurance claims also failed. Although similarities in the contractual 

obligations for indemnity and insurance under the MSAs may suggest that 

indemnity and insurance claims rise and fall together in this litigation, such a 

parallel is not always the case. The scope of insurance coverage is determined 

by the language of the insurance policy obtained,7 which may yield a different 

result than the indemnity provision in the original contract. See Six Flags, Inc. 

v. Westchester Surplus Lines Ins. Co., 565 F.3d 948, 954 (5th Cir. 2009) (“The 

language of the policy is the starting point for determining [the parties’]

intent.”); Elliott v. Cont’l Cas. Co., 949 So.2d 1247, 1254 (La. 2007) (“The 

parties’ intent, as reflected by the words of the policy, determine the extent of 

coverage.”); see also Int’l Offshore Servs., L.L.C. v. Linear Controls Operating, 

Inc., 647 F. App’x 327, 329 (5th Cir. 2016) (“Even assuming arguendo that the 

MSC required Linear to secure [insurance] coverage, that would not determine 

whether Linear actually secured the coverage in this Policy. We must look to 

 

7 Following the Supreme Court’s decision in Wilburn Boat Co. v. Fireman’s Fund 

Insurance Co., 348 U.S. 310 (1955), we have held that “the interpretation of a contract of 

marine insurance is—in the absence of a specific and controlling federal rule—to be 

determined by reference to appropriate state law.” Ingersoll-Rand Fin. Corp. v. Emp’rs Ins. 

of Wasau, 771 F.2d 910, 912 (5th Cir. 1985); see also Wilburn, 348 U.S. at 313 (“In the field 

of maritime contracts as in that of maritime torts, the National Government has left much 

regulatory power in the States.”); Albany Ins. Co. v. Kieu, 927 F.2d 882, 886 (5th Cir. 1991) 

(“State law, therefore, governs the interpretation of marine insurance policies unless an 

available federal maritime rule controls the disputed issue.”). Under Louisiana law, 

insurance contracts are subject to general rules of contract interpretation under the civil 

code. Bernard v. Ellis, 111 So. 3d 995, 1002 (La. 2007). 

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the Policy’s language . . . .”); Holden v. U.S. United Ocean Servs., L.L.C., 582 

F. App’x 271, 273 (5th Cir. 2014) (in a case involving both an indemnity 

obligation and an obligation to add a party as a named insured, court analyzed 

each possible ground for liability separately: “We discern two possible ways in 

which there could be coverage . . . (1) if [the indemnitor] were liable via its 

indemnity, . . . or (2) if the [] claims against the indemnitee were covered by 

the policy pursuant to [its] status as an additional insured under the policy.”).8 

Here, none of the insurance policies are in the record nor is there any 

other evidence from which the policy language can be definitively discerned. 

Summary judgment cannot be granted on the insurance claims without first 

reviewing the insurance policies and determining their scope. It is possible 

that Tesla and International were added as additional insureds on a policy that 

provides more coverage than that set forth in the MSAs. On this record, 

however, we cannot make that determination. Accordingly, we vacate the 

district court’s judgment as to Tesla’s and International’s insurance claims and 

remand those claims for appropriate disposition. 

For the foregoing reasons, we AFFIRM the summary judgment

dismissing the indemnity claims, VACATE the dismissal of the insurance 

claims, and REMAND the case to the district court for further proceedings 

consistent with this opinion. 

 

8 Although International Offshore Services and Holden are not “controlling precedent,” 

they “may be [cited as] persuasive authority.” Ballard v. Burton, 444 F.3d 391, 401 n.7 (5th 

Cir. 2006) (citing 5TH CIR. R. 47.5.4).

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