Court Opinion

ID: 50249
Source: CourtListenerOpinion
Date Created: 2010-04-26 00:48:28+00
Date Added: 2024-06-11T17:18:47.319625
License: Public Domain

United States Court of Appeals
                                                           Fifth Circuit
                                                        F I L E D
            UNITED STATES COURT OF APPEALS
                                                          May 17, 2007
                  FOR THE FIFTH CIRCUIT
                                                    Charles R. Fulbruge III
                                                            Clerk

                        No. 05-30964

ROY THIBODEAUX,

                                                Plaintiff,
                             v.

VAMOS OIL & GAS CO, ET AL.,

                                              Defendants,

                             v.

DPR INTERNATIONAL LLC,

          Defendant - Third Party Plaintiff - Appellee,

                             v.

MAXUM SERVICES INC,

         Defendant - Third Party Defendant - Appellant.

                  * * * * * * * * * *

                      consolidated with
                         No. 05-31061

GABINO SILVA,

                                              Plaintiff,
                             v.

DPR INTERNATIONAL LLC, ET AL.,

                                             Defendants,

                             v.

DPR INTERNATIONAL LLC, d.b.a. Axxis Drilling,
                  Defendant - Third Party Plaintiff - Appellee,

                                      v.

      MAXUM SERVICES INC,

                                Third Party Defendant - Appellant.

       Appeals from the United States District Court for the
             Western and Eastern Districts of Louisiana

Before REAVLEY, DeMOSS, and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

      These consolidated appeals arise from two actions, one brought

by Roy Thibodeaux and the other by Gabino Silva, against DPR

International, LLC doing business as Axxis drilling (Axxis). Axxis

filed third-party claims against Maxum Services, Inc. (Maxum)

seeking indemnity and defense in each case.          On summary judgment,

the district court found that Maxum owed Axxis an obligation of

indemnity and defense and Maxum brings these appeals.

      We DISMISS the appeal deriving from Thibodeaux’s claim for

lack of jurisdiction. Because Thibodeaux’s underlying claim is not

yet   resolved,    there   is   no   appealable   order   establishing   the

parties’ substantive rights and liabilities as envisioned by 28

U.S.C. § 1292(a)(3).

      In contrast, Silva’s claim has settled and the district

court’s order is final and appealable.        Considering the merits, we

AFFIRM the district court’s judgment that Maxum must defend and

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indemnify Axxis in Silva’s case.

                    I.   BACKGROUND AND PROCEDURAL HISTORY

     Maxum is a contract labor provider that directly employed

Silva    and   Thibodeaux.       Maxum   entered      into    a   Master   Service

Agreement (MSA) with Axxis, whereby Maxum would provide personnel

for Axxis’s drilling operations.                Pursuant to the MSA, Maxum

assigned both plaintiffs to work for Axxis on the inland drilling

vessel FREEDOM.          Plaintiffs allege that they sustained injuries

during their work as roustabouts on the FREEDOM and brought Jones

Act claims against Axxis.

     While refuting the plaintiffs’ substantive claims, Axxis filed

a third-party demand against Maxum seeking indemnity and defense.

Axxis made this claim under the MSA’s provisions stating that Maxum

agreed “to protect, defend, indemnify and hold harmless [Axxis] .

. . from and against all claims, demands, causes of action, cost,

expenses, or losses . . . arising in connection herewith in favor

of Maxum’s employees.”        The MSA further provided that it “shall be

governed by and interpreted in accordance with the general maritime

law and statutes of the United States . . . .”

     Based     on     this   language,       Axxis   sought   summary      judgment

declaring that Maxum must defend and indemnify it in the underlying

suits.    Without disputing the plain meaning of the MSA’s indemnity

terms, Maxum made two arguments relevant here: (1) it was unaware

that its employees would be used in a maritime assignment, thereby

vitiating its consent to the contract as applied to these Jones Act

                                         3
claims; and (2) Louisiana law invalidates the indemnity clause and

it, rather than maritime law, should be used to interpret the MSA.

     The district court rejected Maxum’s arguments and granted

summary judgment in favor of Axxis.

                             II.   DISCUSSION

     A. Jurisdiction

     This court has jurisdiction over three types of appeals: (1)

final orders, 28 U.S.C. § 1291; (2) certain types of interlocutory

appeals, 28 U.S.C. § 1292(a); and (3) an appeal involving a

question certified as final by the district court, 28 U.S.C. §

1292(b).   See United States v. Powell, 468 F.3d 862, 863 (5th Cir.

2006).

     While   these   cases   are   consolidated,   they   come   to   us   in

different procedural postures that require separate jurisdictional

consideration.   Silva settled his claims against Axxis, and Maxum

agreed that the settlement was reasonable.          As the defense and

indemnity claims are all that remain, we have jurisdiction to hear

the appeal deriving from Silva’s case as a final order.               See 28

U.S.C. § 1291.

     Thibodeaux’s claims have not settled and are still being

litigated, eliminating § 1291 as a possible jurisdictional basis.

Maxum claims that this Court has jurisdiction under § 1292(a)(3),

which provides that this Court has jurisdiction over appeals from:

     (3) Interlocutory decrees of such district courts or the
     judges thereof determining the rights and liabilities of

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      the parties to admiralty cases in which appeals from
      final decrees are allowed.

“Orders which do not determine the parties’ substantive rights or

liabilities, however, are not appealable under section 1292(a)(3)

even if those orders have important procedural consequences.”

Complaint of Ingram Towing Co., 59 F.3d 513, 517 (5th Cir. 1995)

(citation omitted).       Interlocutory appeals are not favored, and we

strictly construe statutes permitting them.                    Id. at 515.

      Maxum neglects to even consider whether the decree at issue

determined    its      rights   and    liabilities        as    contemplated     in   §

1292(a)(3), and we find that it did not.                  We have previously held

that a district court order holding a third-party insurance company

liable for covering a defendant did not satisfy the requirements of

§   1292(a)(3)    so    long    as    the       primary   plaintiff’s    claim    was

unresolved.      See Hollywood Marine, Inc. v. M/V Artie James, 755
F.2d 414 (5th Cir. 1985).        We reasoned that, like Maxum, “the party

whose contention is rejected remains in the litigation and the

issue of its liability on the claim asserted remains to be finally

resolved.”    Id. at 416.

      In other words, because Thibodeaux has yet to establish that

the primary defendant is liable, whether Maxum is liable as a third

party is entirely undetermined.             The same could not be said if the

district court denied Axxis’s indemnity claim, or if liability was

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established and all that remained was a damages determination.1

Because Thibodeaux’s claim is unresolved, the district court’s

indemnity order did not determine Maxum’s liabilities, and we lack

jurisdiction.       If Thibodeaux’s claim fails, Maxum’s obligation to

indemnify Axxis will amount to nothing.

     Notably, despite our request for briefing on jurisdictional

issues, Maxum does not argue that the duty to defend provides a

unique jurisdictional basis that might make Hollywood Marine’s

analysis     inapplicable      here.        Maxum    “bears    the   burden    of

establishing this court’s appellate jurisdiction over this appeal,”

and there is no need to explore jurisdictional bases the appellant

does not address.       See Acoustic Sys., Inc. v. Wenger Corp., 207
F.3d 287, 289 (5th Cir. 2000).          As we stated in Hollywood Marine,

“[d]espite    our    request    for    special      briefs   addressed   to   the

     1
        An order denying indemnity completely settles the third-
party’s liability as to both the plaintiff and the principal
defendant, as it establishes that the third party has no liability
whatsoever.    Hollywood Marine, 755 F.2d at 415 (discussing
O’Donnell v. Latham, 525 F.2d 650 (5th Cir. 1976)); see also
Campbell v. Sonat Offshore Drilling, Inc., 27 F.3d 185, 187 n.3
(5th Cir. 1994) (finding denial of indemnification claim appealable
and contrasting Hollywood Marine as requiring indemnity).

      If liability on the principal claim is resolved then an order
requiring indemnification will conclusively establish the rights
and liabilities of the third party as to both the principal and the
defendant sufficient for jurisdiction under § 1292(a)(3). This is
true even if the damage award is still pending. See Stoot v. Fluor
Drilling Serv., Inc., 851 F.2d 1514, 1516 (5th Cir. 1988) (“An
interlocutory decree which finally determines the liability of at
least one party to a maritime suit is appealable under § 1292(a)(3)
even if damages haven’t been finally computed.”).

                                        6
jurisdictional question, the parties do not suggest as a basis for

appeal the possible effect of the district court’s ruling as

determining liability for the costs of defense. We, therefore,

express no opinion on that subject.” 755 F.2d at 416.

     We DISMISS the appeal deriving from Thibodeaux’s claim (05-

30964) for lack of jurisdiction.       We proceed to the merits on the

dispute arising out of Silva’s claim (05-31061).

     B.   Maxum has a Duty to Defend and Indemnify Axxis

     The district court found on summary judgment that the MSA

required Maxum to defend and indemnify Axxis.          “We review the

district court’s legal conclusions, including its interpretation of

contracts, de novo.”   Texaco Exploration & Prod., Inc. v. AmClyde

Engineered Prods. Co., Inc., et al., 448 F.3d 760, 777 (5th Cir.

2006).

     The MSA’s language is perfectly clear. It provides that Maxum

will defend and indemnify Axxis against all claims brought by Maxum

employees in connection with the MSA.      It is undisputed that Silva

is a Maxum employee, that he was assigned to work for Axxis as

contemplated by the MSA, and that his claim arises from that work.

Despite MSA’s clear language, Maxum argues that (1) the contract is

invalid because error vitiated Maxum’s consent, and (2) it is

unclear whether maritime law applies, and if it does not, then the

indemnity clause is unenforceable under the Louisiana Oilfield

                                   7
Indemnity Act.          See LA. REV. STAT. 9:2780.       Neither of Maxum’s

arguments give us much cause for concern.

            1.   Error did not Vitiate Maxum’s Consent

        Maxum’s only argument as to why its consent to the MSA was

invalid    is    that    Exhibit   A,   which   set   forth    the    insurance

requirements     and     was   referenced   throughout   the   MSA,    was   not

attached to the MSA during negotiations.          Without Exhibit A, Maxum

allegedly did not realize it could be held liable under the Jones

Act.    It argues that this mistake vitiates its consent to the

contract.

       One party’s error may vitiate consent to a contract “only when

it concerns a cause without which the obligation would not have

been incurred and that cause was known or should have been known to

the other party.”           LA. CIV. CODE art. 1949.       Assuming Maxum’s

allegations are true, which requires overlooking a number of the

MSA’s provisions suggesting that maritime law will apply, the

district court pointed out that Maxum only argues that it did not

have Exhibit A during contract negotiations.             It “does not argue

that Exhibit ‘A’ was absent from the final version of the contract

[its president] signed.”

       The MSA, as signed, is explicit that Maxum must provide

coverage for Jones Act liability.            Assuming Maxum misunderstood

this point, it provides no evidence that Axxis knew or should have

known about this mistaken reading of the contract’s plain terms.

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“In the context of contract interpretation, only when there is a

choice of reasonable interpretations of the contract is there a

material fact issue concerning the parties' intent that would

preclude summary judgment.” Gonzalez v. Denning, 394 F.3d 388, 392

(5th Cir. 2004).     Given the plain terms of the signed MSA, any

misunderstanding was attributable solely to Maxum’s carelessness

and cannot serve to vitiate its consent.

          2.   The MSA is Governed by Maritime Law

     Maxum’s final argument is that Louisiana law should apply to

strike down the MSA’s indemnity clause.      However, if the MSA is a

maritime contract governed by maritime law, as Axxis argues,

Louisiana law is inapplicable and the parties agree that the

indemnity provision is enforceable. See Demette v. Falcon Drilling

Co., 280 F.3d 492, 500 (5th Cir. 2002).

     There is no bright-line rule used to determine whether a

contract is maritime in nature.       Id. at 500 (describing it as “a

perplexing affair”); Theriot v. Bay Drilling Corp., 783 F.2d 527,

538 (5th Cir. 1986).    Determining whether the MSA is a maritime

contract governed by maritime law depends partly on “its historical

treatment in the jurisprudence,” and partly on a six-pronged “fact-

specific inquiry.”    Demette, 280 F.3d at 500 (discussing Davis &

Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313, 316 (5th Cir. 1990)).

It is uncontested that the FREEDOM is an inland drilling barge, and

personnel contracts for such barges are historically treated as

                                  9
maritime contracts.        Demette, 280 F.3d at 500–01.

     As for the fact-specific inquiry, we need not consider each of

the six prongs listed in Demette individually.2           Axxis points out

that the undisputed evidence shows that all six of these factors

militate in favor of finding that this was a maritime contract and

Maxum never makes any allegation disputing that.           Maxum only makes

a conclusory statement that there are insufficient facts to find

that maritime law applies.        But Maxum cannot defeat a motion for

summary judgment merely by claiming “some metaphysical doubt” as to

the material facts.        Matsushita Elec. Indus. Co., Ltd v. Zenith

Radio Corp., 475 U.S. 574, 586 (1986).           “[T]he mere existence of

some alleged factual dispute between parties will not defeat an

otherwise    properly      supported    motion   for   summary    judgment.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986).

Axxis’s    argument   is    strengthened    by   the   MSA’s   choice-of-law

provision stating that general maritime law is applicable.

     2
         The six prongs are as follows:
            1. What does the specific work order in effect at the
            time of the injury provide?
            2. What work did the crew assigned under the work
            order actually do?
            3. Was the crew assigned to do work aboard a vessel in
            navigable waters?
            4. To what extent did the work being done relate to
            the mission of the vessel?
            5. What was the principal work of the injured worker?
            6. What work was the injured worker actually doing at
            the time of injury?

                                       10
     The district court properly found that the MSA is governed by

maritime law and Maxum has failed to point to any concrete factual

dispute that could alter that finding.   Under maritime law, it is

undisputed that the indemnity provision at issue is valid, so we

affirm the district court’s judgment.

                         III.   CONCLUSION

     We DISMISS the appeal arising from Thibodeaux’s claim for lack

of jurisdiction.   We AFFIRM the district court’s summary judgment

related to Silva’s claim.

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