Opinion ID: 658569
Heading Depth: 2
Heading Rank: 4

Heading: Summary Judgment for SEE

Text: 27 Placid challenges the district court's grant of summary judgment for SEE, claiming that its agreement with SEE does not violate the LOIA because it falls within the exception created in Patterson v. Conoco, Inc., 670 F.Supp. 182 (W.D.La.1987). 10 28 The LOIA voids oilfield agreements to the extent the agreements contain provisions for indemnification for losses caused by negligence or fault of the indemnitee. 11 Under the agreement at issue in Patterson, the employer of the injured plaintiff was required to provide insurance coverage indemnifying a third party, an arrangement within the reach of the LOIA and similar to the terms agreed to by Placid and SEE. The agreement provided, however, that the indemnitee would reimburse the employer for the insurance premiums. The indemnitee produced evidence documenting its payment of these premiums over a period of approximately eighteen months. Based upon this reimbursement, the court concluded that the agreement was not void because the indemnitee had paid for its own insurance. 29 Although this Court has not ruled directly on the Patterson exception, we tacitly approved it in Davis v. Mobil Oil Exploration & Producing Southeast, Inc., 864 F.2d 1171, 1176 (5th Cir.1989) (affirming dismissal, without indicating disapproval of Patterson, because request to court for inquiry into payment of premiums was untimely). 30 We now adopt the exception created in Patterson as law of this Circuit and find that it has potential application here. 12 The LOIA is aimed at preventing the shifting of the economic burden of insurance coverage or liability onto an independent contractor. If the principal pays for its own liability coverage, however, no shifting occurs. We see no need to prevent such an arrangement in order to give effect to the LOIA. Indeed, agreements such as the one in Patterson may be economically desirable in situations where it is less expensive for the independent contractor to add the principal as an additional insured than for the principal to obtain its own insurance on a particular operation. 31 In approving this exception, however, we stress that the exception does not apply if any material part of the cost of insuring the indemnitee is borne by the independent contractor procuring the insurance coverage. 32 SEE, as the party requesting summary judgment, had the burden of demonstrating that the insurance agreement was void under the LOIA and that there was no fact issue regarding any economic burden on SEE. It is not clear from the record, however, that this is true. Amendments to the agreement between Placid and SEE provide that Placid was to pay one-half of the premium paid by SEE 33 for this Contract to perform these services which shall be 0.675% of Daily Revenue. Insurance premiums will be over and above the contract rates and will be in consideration for insurance supplied, not consideration paid to or for the benefit of SEE, Inc. Essentially, this means that over the life of the job Placid would be paying approximately $34-$36/day to be named as an additional insurer [sic] under the policy. Monthly billings will be transmitted to Placid by our Brokers after the revenues for the previous month have been determined. Amendment to Exhibit E of the Workover Contract. 34 Although Placid's payment is to be one-half the premium paid by SEE, our analysis does not end without knowing how much of the insurance cost is attributable to insuring Placid. The burden to show this was on SEE, the summary judgment movant that was to procure the insurance. Because it is not clear from the record before us whether SEE paid for any cost of insuring Placid, we cannot determine that this contract does not fall within the Patterson exception. 35 We reverse the district court's summary judgment for SEE and remand Placid's third-party claims for reconsideration in light of Patterson. If Placid was responsible for the full cost of obtaining its insurance, the agreement is similar to that in Patterson and is not void under the LOIA; if SEE paid any material part of the cost of Placid's insurance, however, the district court should reinstate its summary judgment in favor of SEE. Cross-Appeal