Opinion ID: 508977
Heading Depth: 2
Heading Rank: 3

Heading: Anti-Indemnity Statute:

Text: 18 Having concluded that Louisiana law governs, we must determine whether the Anti-Indemnity Statute voids the indemnity clause in D & D's contract. The Anti-Indemnity Statute provides that: 19 Any provision contained in, collateral to, or affecting an agreement pertaining to a well for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, is void and unenforceable to the extent that it purports to or does provide for defense or indemnity, or either, to the indemnitee against loss or liability for damages arising out of or resulting from death or bodily injury to persons, which is caused by or results from the sole or concurrent negligence or fault (strict liability) of the indemnitee, or an agent, employee, or an independent contractor who is directly responsible to the indemnitee. 20 La.Rev.Stat.Ann. Sec. 9:2780, subd. B (West Supp.1987). 21 Article 10 of the catering contract between Fluor and D & D provides that: 22 D and D shall hold [Fluor] free and harmless from any and all liability, costs and charges arising out of injuries or damage to any and all persons, employees and/or property in any way arising out of or incident to the work to be performed under this Contract whether caused in whole or part by negligence of [Fluor]. D and D further agrees to investigate, handle, respond to, provide defense for and defend any such claims, demand or suit as its sole expense and agrees to bear all other costs and expenses related thereto, even if it is groundless, false or fraudulent. 23 Because the indemnity clause requires D & D to defend and indemnify Fluor against Fluor's own negligence, the clause is void under the Anti-Indemnity Statute if the Statute applies. 24 By its terms, the Statute does not apply retroactively to contracts entered into before its effective date, September 11, 1981. La.Rev.Stat.Ann. Sec. 9:2780, subd. I (West Supp.1987); Lirette v. Union Texas Petroleum Corp., 467 So.2d 29, 32-33 (La.App. 1 Cir.1985). D & D contracted to provide catering services to Fluor for a period of one year commencing on July 1, 1977. The contract also provided that it would continue in force and effect thereafter unless either party gave the other 30 days written notice of termination. Under this automatic continuation clause, the annual period which immediately preceded Stoot's injury on April 18, 1982 occurred on July 1, 1981. Hence, whether we consider July 1, 1977 or July 1, 1981 (as Fluor suggests) to be the contract's date, the contract was entered into before the Statute's effective date. Hence, the Statute may not retroactively apply unless an exception listed in subdivision I of the Statute comes into play. It is not necessary for this court to decide the precise meaning of the continue in effect language under Louisiana contract law. 25 Subdivision I states that the Anti-Indemnity Statute applies retroactively to: 26 certain provisions contained in, collateral to or affecting agreements in connection with the activities listed in Subsection C which are designed to provide indemnity to the indemnitee for all work performed between the indemnitor and the indemnitee in the future. This specifically includes what [are] commonly referred to in the oil industry as master or general service agreements or blanket contracts in whatever form and by whatever name. The provisions of this Act shall not apply to a contract providing indemnity to the indemnitee when such contract was executed before the effective date of this Act and which contract governs a specific terminable performance of a specific job or activity listed in Subsection C. 1 27 La.Rev.Stat.Ann. Sec. 9:2780, subd. I (West Supp.1987). 28 If the Fluor/D & D contract was a master service agreement, then it will be covered by the Statute. If it was a contract for specific terminable performance, the Statute is not to be applied retroactively. 29 A master service agreement is a blanket contract (whether or not so labeled) which covers any kind of work the independent contractor might be requested to perform for the principal and which renews automatically or continues in effect until either party gives notice of termination. Doucet, supra, 783 F.2d at 526. A master service agreement usually refers to the type of work contemplated but does not identify a determinate time or place of performance. Page v. Gulf Oil Corp., 775 F.2d 1311, 1315 (5th Cir.1985). Blanket contracts set forth the terms of performance and payment for any and all work and pay the parties might exchange in the future. Burnham v. Sun Oil Co., 618 F.Supp. 782, 785 (W.D.La.1985). 30 By contrast, a contract for specific terminable performance is directed at a specific job or activity and terminates on its own terms at the completion of the job or upon the impossibility of further performance. Burnham, supra, 618 F.Supp. at 785. 31 D & D's contract contains elements of both a master service agreement and a contract for specific terminable performance. Like a contract for specific terminable performance, it states that D & D shall provide to certain of Fluor's named drilling rigs a specific service, catering, on a continuous basis with performance commencing on July 1, 1977. Like a master service agreement, D & D's obligations do not terminate automatically upon the completion of any specific drilling job, but renew automatically from year to year as the rigs move from job to job until either party gives notice of termination. The features that identify this as a master service agreement clearly predominate. 32 The Louisiana legislature explicitly stated that a master service agreement entered into before the effective date of the Statute is covered by the Statute. La.Rev.Stat.Ann. Sec. 9:2780, subd. I (West Supp.1987). The legislature undoubtedly made this explicit reference to master service agreements because the agreements automatically renew and often did not require performance until several years after they were executed. If the legislature had not expressly included master service agreements entered into before the Statute's effective date, then contractors bound by these agreements would be subject indefinitely to defend-and-indemnify clauses despite the Statute's passage. This could have largely defeated the intent of the legislature. Because D & D's contract with Fluor is automatically renewing, D & D is within the class of contractors the legislature intended to protect when it drafted the exception in subdivision I. 33 Further, the Statute specifies that it does not apply retroactively to contracts which call for specific and terminable performance. La.Rev.Stat.Ann. 9:2780, subd. I (West Supp.1987). D & D's contract called for specific performance--rig catering at set prices; however, that performance was not terminable. Burnham, supra, 618 F.Supp. at 785. Hence, D & D's contract is not exempted as a contract for specific terminable performance entered into before the Statute's effective date. The Anti-Indemnity Statute voids D & D's obligation to defend and indemnify Fluor against Stoot's claims. D & D is not obligated to defend Fluor or to indemnify it for the consent judgment the district court entered in Stoot's favor.