Court Opinion

ID: 4044118
Source: CourtListenerOpinion
Date Created: 2016-09-28 23:31:56.888734+00
Date Added: 2024-06-11T14:29:48.489287
License: Public Domain

ACCEPTED
                                                                                     01-13-00817-CV
                                                                           FIRST COURT OF APPEALS
                                                                                   HOUSTON, TEXAS
                                                                               1/16/2015 10:53:10 AM
                                                                                 CHRISTOPHER PRINE
                                                                                              CLERK

                                NO. 01-13-00817-CV

            IN THE COURT OF APPEALS FOR THE FIRST DISTRICT
                                                        FILED IN
                                                  1st COURT OF APPEALS
                          AT HOUSTON, TEXAS           HOUSTON, TEXAS
                                                           1/16/2015 10:53:10 AM
                                                           CHRISTOPHER A. PRINE
      HERCULES OFFSHORE, INC. AND THE               HERCULES  OFFSHORE
                                                                    Clerk
                   DRILLING COMPANY, LLC,
                           Appellants,

                                            v.

                      EXCELL CRANE & HYDRAULICS, INC.,
                                 Appellee.

                   ON APPEAL FROM THE 133RD DISTRICT COURT
                            HARRIS COUNTY, TEXAS

                   HERCULES OFFSHORE, INC. AND
          THE HERCULES OFFSHORE DRILLING COMPANY, LLC’S
          OPPOSITION TO EXCELL CRANE & HYDRAULICS, INC.’S
                      MOTION FOR REHEARING

       JENNIFER E. MICHEL                        MICHAEL JACOBELLIS
       State Bar No. 24033989                    State Bar No. 10515100
       LEWIS BRISBOIS BISGAARD                   LEWIS BRISBOIS BISGAARD
       & SMITH LLP                               & SMITH LLP
       100 E. Vermilion Street, Suite 300        3355 West Alabama, Suite 400
       Lafayette, Louisiana 70501                Houston, Texas 77098
       Telephone: (337) 326-5777                 Telephone: (713) 659-6767
       Facsimile: (337) 504-3341                 Fax: (713) 759-6830

                              Attorneys for Appellants

4811-9345-2321.1
                                          TABLE OF CONTENTS

OPPOSITION ARGUMENTS AND AUTHORITIES .............................................................. 4

CONCLUSION AND PRAYER ....................................................................................... 14

CERTIFICATE OF SERVICE .......................................................................................... 16

4811-9345-2321.1                                         2
                                            TABLE OF AUTHORITIES

CASES

Aviation Office of Am. v. Alexander & Alexander of Tex., Inc., 751 S.W.2d 179
(Tex. 1988) ................................................................................................................. 4

Becker v. Tidewater, 586 F.3d 358 (5th Cir. 2009) ................................................... 7

Employers Casualty Co. v. Block, 744 S.W.2d 940 (Tex.1988) ............................... 9

Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc., 256 S.W.3d 660
(Tex. 2008) ................................................................................................................. 9

Hercules Offshore v. Excell Crane & Hydraulics, Inc., 2014 Tex. App. LEXIS
12557 (Tex. App. Houston 1st Dist. Nov. 20, 2014) ........................................passim

LeBlanc v. Global Marine Drilling Co., 193 F.3d 873 (5th Cir. 1999)..................... 7

Lloyd’s of London v. Oryx Energy Co., 142 F.3d 255 (5th Cir. 1998) ...................... 7

Mid Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487 (5th Cir. 2000) ............. 7

Ogea v. Loffland Brothers Co., 622 F.2d 186 (5th Cir. 1980) .......................passim

Parfait v. Jahncke Service, Inc., 484 F.2d 296 (5th Cir.1973) .................................. 9

Tullier v. Halliburton Geophysical Servs., Inc., 81 F.3d 552
(5th Cir. 1996) ....................................................................................................... 5, 6

Voisin v. O.D.E.C.O. Drilling Co., 744 F.2d 1174 (5th Cir. 1984) ..................12, 13

Wentworth v. Meyer, 839 S.W.2d 766 (Tex. 1992) ............................................. 4, 11

4811-9345-2321.1                                              3
TO THE HONORABLE JUSTICES OF THE FIRST COURT OF APPEALS:

                      OPPOSITION ARGUMENT AND AUTHORITIES

MAY IT PLEASE THE COURT:

         The sole purpose of a motion for rehearing is to provide the Court an

opportunity to correct any errors on issues earlier presented. Wentworth v. Meyer,

839 S.W.2d 766, 778 (Tex. 1992). A motion for rehearing does not afford a

litigant an opportunity to raise new issues, especially after the case has been

briefed, argued, and decided on other grounds. Wentworth, 839 S.W.2d at 778

(citing Aviation Office of Am. v. Alexander & Alexander of Tex., Inc., 751 S.W.2d
179 (Tex. 1988). To be meritorious then, the mover should be able to cite some

tangible error in support of its application.

         Excell points to no specific error in this court’s original ruling. Rather,

Excell’s motion is simply a request that this Court revisit and decide differently the

very same issues it considered on initial review. The motion seeks a wholesale re-

evaluation of the entire case, rather than correction of specific assignments of error

for which the rehearing process is designed. Accordingly, Excell’s Motion for

Rehearing should be denied.

            The Ogea Rule Applies Even to a Claim by Hercules’ Employee

         Excell’s first argument, that the Ogea rule does not apply because the

underlying Plaintiff in Ogea was a third party where, here, Brunson was Hercules’
4811-9345-2321.1                             4
employee, was briefed and argued on initial review but properly rejected by this

Court. See Brief of Appellee Excell Crane & Hydraulics, December 23, 2013, pp.

18-20; Hercules Offshore v. Excell Crane & Hydraulics, Inc., 2014 Tex. App.

LEXIS 12557, 10 (Tex. App. Houston 1st Dist. Nov. 20, 2014) (This case is not

controlled by Ogea.). Additionally, this very argument has been rejected by

jurisprudence following Ogea v. Loffland Bros., 622 F.2d 186 (5th Cir. 1980).

         In Tullier v. Halliburton Geophysical Servs., Inc., as here, the parties to a

time charter agreed to broadly defend and indemnify each other from and against

claims brought on behalf of the indemnitors’ employees. 81 F.3d 552, 553 (5th

Cir. 1996). The party seeking indemnity in the lawsuit, McCall Boat Rentals, had

also agreed to procure Protection and Indemnity (P&I) coverage including the

other party, Halliburton, as an additional assured. Id.

         The district court held in McCall’s favor on its indemnity claim, reasoning

that because Halliburton was required to indemnify McCall for injuries to

Halliburton employees, Halliburton could not rely on McCall’s insurance coverage

to fulfill its obligation. Id. The appellate court reversed the district court’s

decision, however, following the Ogea line of cases.

         Excell also once again argues the insurance required of both parties to

support the indemnity agreement somehow impacts the Ogea rule regarding the

separate and independent additional insured obligation undertaken solely by

4811-9345-2321.1                             5
Excell. This Court rejected this exact argument on initial review. Hercules

Offshore, 2014 Tex. App. LEXIS 12557 at 13-14 (“Paragraph 15.D. required

Hercules to procure insurance to support its indemnity obligation, but that

insurance is not triggered until after the limits of insurance that Excell agreed to

purchase under Paragraph 9 and Exhibit A are exhausted.”).

         This Court correctly relied upon Tullier, which had rejected any notion that

the indemnitor’s duty to insure its indemnity obligation would in any way bear

upon the responsibility of the indemnitee to obtain additional insured coverage in

favor of the indemnitor. The Tullier court concluded it does not. (“[T]his

interpretation of the insurance procurement provision does not ignore

[Halliburton'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 [Halliburton] as an additional assured. [Halliburton], therefore, contracted to

insure liabilities over that amount in fulfillment of its indemnity responsibility.”).

         Similarly, here, Hercules’ agreement to insure its indemnity obligation does

not alter the conclusion that Excell and Excell alone agreed to provide additional

insured coverage to Hercules.

         Excell next mistakenly attempts to limit its obligation to provide additional

insured coverage to Hercules to the scope of the indemnities undertaken by each

party. Excell, relying on its own indemnity obligation to Hercules, somehow

4811-9345-2321.1                            6
argues the additional insured coverage should then be restricted to third party

liability. The Excell MSA contains NO wording limiting the obligation to obtain

additional insured coverage to the extent of the indemnity undertaken or to third

party liability. The only time Courts have allowed a separate additional insured

obligation to be controlled by an indemnity obligation is when the wording of the

additional insured obligation expressly makes the additional insured obligation of

the contract dependent on the indemnity obligation undertaken in the same

contract. See Lloyd’s of London v. Oryx Energy Co., 142 F.3d 255, 258 (5th Cir.

1998); Mid Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487, 494, n.8 (5th

Cir. 2000); LeBlanc v. Global Marine Drilling Co., 193 F.3d 873, 875 (5th Cir.

1999); and Becker v. Tidewater, 586 F.3d 358, 370 (5th Cir. 2009). Such limiting

language is NOT contained in the Hercules/Excell MSA.

         Excell’s further assertion that Excell did not agree to insure Hercules for

employee claims based on Hercules’ independent fault, rather than vicarious

liability for Excell’s fault, is patently false. Rather, the MSA expressly requires (1)

Hercules to be named an additional insured; and (2) the coverage extended to

Hercules as an additional assured to not be less than that provided to Excell itself.

(CR 91). Nowhere in the MSA was the additional insured requirement restricted to

vicarious liability or to the indemnities undertaken. Rather, Excell was required to

obtain no less coverage for Hercules than it had for itself, (CR 91), and Excell’s

4811-9345-2321.1                             7
insurance coverage was to be primary/non-contributory to Hercules’ own

coverage.

         Excell also claims “the exclusion of the Worker’s Compensation policy from

the additional insured requirement confirms that the insurance was not intended to

cover Hercules for claims made by its employees.” At another point in its Motion,

Excell misleadingly suggests both “Worker’s Compensation/Employer’s Liability”

policies are excluded from the additional insured requirement. That is simply not

the wording of the contract.

          Excell is correct that additional insured coverage was not required under the

worker’s compensation policy. However, Excell ignores the MSA’s wholly

separate requirement that additional insured coverage WAS to be afforded under

Excell’s Employer’s Liability coverage for onshore and overwater operations.

Under the MSA, the Worker’s Compensation and Employer’s Liability policies are

separately listed requirements, (CR 91), and only the Worker’s Compensation

policy is excluded from the additional insured obligation. Excell’s position on this

point likewise fails.

                        Excell is Barred from Contesting the
                      Reasonableness of the Brunson Settlement

         Excell complains that Hercules settled the Brunson claim without input or

approval from Excell. Even more egregiously, Excell suggests Hercules was not

damaged by Excell’s breach of its agreement to provide additional insured
4811-9345-2321.1                            8
coverage to Hercules. Excell, tellingly, does not dispute that it was given notice of

Hercules’ claim for defense, indemnity and additional insured coverage and an

opportunity to participate in the impending settlement. Indeed, Hercules made

demand on Excell prior to settlement of Mr. Brunson’s claim, which was rejected

by Excell. Having denied liability and having refused to defend the Brunson

matter, Excell is bound by the settlement.1

         Excell has waived and/or is estopped from contesting the reasonableness of

the settlement. The Texas Supreme Court has repeatedly recognized that one who

wrongfully refuses to defend or indemnify is precluded from collaterally attacking

the reasonableness of a settlement entered into between an insured and a third

party. See e.g. Employers Casualty Co. v. Block, 744 S.W.2d 940, 943 (Tex.1988);

Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc., 256 S.W.3d 660, 671 (Tex.

2008). Further, where an indemnitor refuses to approve a settlement and/or

refuses to indemnify the indemnitee, then the indemnitee is only required to show

potential liability to the original plaintiff to support his claim for indemnity.

Parfait v. Jahncke Service, Inc., 484 F.2d 296, 305 (5th Cir.1973).

1
 Excell’s brief is replete with incorrect references to facts not in evidence, e.g., settlement
negotiations/mediation discussions, not appropriate for consideration by this Court. Excell is
also confusing the injuries sustained by Dennis Brunson with those less severe sustained by
fellow employee, Kevin Currey, who filed suit in Louisiana. For clarification, Dennis Brunson
suffered several injuries to his right ankle, right knee, lower and middle back, and neck, as well
as a hernia. Mr. Brunson no less than seven surgeries as a result of his injuries.
4811-9345-2321.1                                 9
         In short, Texas courts have refused to allow a party to do what Excell is

attempting to do here – to repeatedly deny responsibility/coverage for a loss and

then complain about the amount spent when the other party, left to its own devices,

prudently resolves the claim.

                   Dismissal of Excell’s Cross-Claim is Warranted

         Excell acknowledges, if Ogea applies, it dictates that Excell cannot recover

defense costs or seek indemnity until its policy limits are exhausted. Excell argues,

because the record does not contain evidence regarding the amount of the

settlement, its indemnity claim cannot be dismissed.

          Excell has no claim for indemnity since it acknowledges Hercules funded

and Excell paid nothing toward settlement of the Brunson claim. Assuming Excell

is actually concerned with recovery of its defense costs, this Court, in remanding

the case to the district court, expressly acknowledged the potential that Excell

would be entitled to a to an offset for any amounts Hercules owed after exhaustion

of the additional insured coverage. Hercules Offshore, 2014 Tex. App. LEXIS

12557 at 21 (“[W]e remand to the trial court to determine the amount of Hercules's

damages and whether Excell is entitled to an offset.). (Emphasis added.). Thus,

Excell’s concern is properly protected by the Court’s current ruling.

4811-9345-2321.1                           10
    If Excell Failed to Obtain the Required Insurance, it Breached the MSA

         Remarkably, after steadfastly claiming time and again throughout the course

of this litigation that its policy afforded no coverage to Hercules, Excell now seeks

to prevent this Court from accepting Excell’s own representations. Excell now

contends, “there is absolutely no record evidence” to support the Court’s finding

on the following point: “It is undisputed that Excell obtained some insurance

coverage, but Excell concedes that it did not obtain coverage of the type Hercules

argues that Paragraph 9 and Exhibit A require.”         Hercules Offshore, 2014 Tex.

App. LEXIS 12557 at 5-6. But this is exactly what Excell plainly argued before

the trial court and before this Court. See Brief of Appellee Excell Crane &

Hydraulics, December 23, 2013 (“Excell’s insurance does not apply in this case.”

p. 27; “The insurance does not apply to Hercules given the indisputable facts of

this case.” p. 29; “Hercules does not qualify as an additional insured.”). Excell’s

sudden change of position is not proper on rehearing, where a mover is barred from

raising new issues. Wentworth, 839 S.W.2d at 778.

         Excell further asserted in its initial brief that it was not required to obtain

insurance without exclusions. See Brief of Appellee Excell Crane & Hydraulics,

December 23, 2013, p. 28). However, Excell did not claim then nor do they claim

now that an exclusion in the policy bars coverage. Rather, Excell claims its

insurance did not afford coverage because the additional insured endorsement was

4811-9345-2321.1                              11
restrictive and applied in favor of Hercules only when a third party claim was

made against it for the vicarious fault of Excell as its contractor and not for

Hercules’ fault for its own employee’s claim. See Brief of Appellee Excell Crane

& Hydraulics, December 23, 2013, pp. 28-29). Thus, by Excell’s own admission,

it was in breach of the MSA by failing to obtain the unrestricted additional insured

coverage required by the MSA, and this Court’s recognition of this is not in error.

         If Excell did in fact obtain restrictive coverage for Hercules, it would have

done so in direct breach of the MSA. Moreover, Excell’s position has been firmly

rejected by prior case law. In Voisin v. O.D.E.C.O. Drilling Co., 744 F.2d 1174

(5th Cir. 1984), the United States Fifth Circuit Court of Appeals held that a

stevedore breached its contractual obligation by failing to add the vessel owner as

an additional insured in the unqualified manner directed by the contract between

the parties. There, the Master Service Contract between O.D.E.C.O. and Rig

Hammers required Rig Hammers to carry various kinds of insurance with stated

minimum limits. Paragraph 8(f) of the contract specifically provided that all

policies of [Rig Hammers] ... shall name [O.D.E.C.O.] as an additional assured . . .

.” Rig Hammers had an endorsement added to its comprehensive general liability

policy; however, the endorsement contained the qualification that the insurer

“assum[ed] no greater liability . . . than would have been assumed by insuring the

4811-9345-2321.1                            12
indemnity clause contained in the contract between Rig Hammers and

O.D.E.C.O.” Voisin, 744 F.2d at 1175-1176.

         The Fifth Circuit held that Rig Hammers breached the Master Service

Contract by “failing to add O.D.E.C.O. as an additional assured in the unqualified

manner directed by paragraph 8(f) of the contract.” Voisin, 744 F.2d at 1179.

Recognizing that O.D.E.C.O. was forced to expend monies that it would not have

owed in the absence of Rig Hammers' breach, the Fifth Circuit remanded for a

determination of damages, including the availability of attorneys’ fees. This is

exactly what happened in this case, and this Court’s remand for a determination of

damages by the district court is proper.

          For the same reasons, Excell’s argument that Hercules could have invoked

Paragraph 9 of the MSA also fails. (This, too, is a new argument on rehearing that

should be rejected.). Paragraph 9, as quoted by Excell, is triggered only when the

insurance policies required under the MSA were not “procured or maintained,” and

in the event the required policies were not “procured or maintained,” Paragraph 9

gives Hercules the option of purchasing similar coverage and charging the cost to

Excell, terminating the MSA, or reducing the contract payments to Excell.

Hercules could not have invoked this provision, as a policy of insurance was

purchased by Excell. Excell does not disagree that it purchased insurance; rather,

Excell concedes no coverage was afforded to Hercules for the Brunson accident

4811-9345-2321.1                           13
because the policy at issue contained a restrictive additional insured endorsement.

Paragraph 9 is not triggered in this instance, and Ogea’s either/or approach

controls, as this Court appropriately held.

                              CONCLUSION AND PRAYER

         Excell’s Motion for Rehearing is an attempt to have this Court re-evaluate

and re-analyze the entire case. The application does not identify any specific

errors in the conclusions of this Court, but rather alleges error in the resolution of

the case in its entirety. Hercules therefore submits that the motion falls

considerably short of satisfying the burden necessary to reverse this Court’s

original decision, which was in all respects, correct.

         For the foregoing reasons, Hercules prays Excell’s Motion for Rehearing be

denied and that this Court’s original opinion be upheld.

                                          Respectfully Submitted,

                                          LEWIS BRISBOIS BISGAARD & SMITH, LLP

                                               /s/ Jennifer E. Michel
                                          JENNIFER E. MICHEL
                                          State Bar No. 24033989
                                          100 East Vermilion Street, Suite 300
                                          Lafayette, Louisiana 70501
                                          Telephone: (337) 326-5777
                                          Facsimile: (337) 504-3341

                                                AND

4811-9345-2321.1                           14
                   MICHAEL JACOBELLIS
                   State Bar No. 10515100
                   3355 West Alabama, Suite 400
                   Houston, Texas 77098
                   Telephone: (713) 659-6767
                   Fax: (713) 759-6830
                   Attorneys for Appellants

4811-9345-2321.1   15
                              CERTIFICATE OF SERVICE

       Pursuant to TEX. R. CIV. P. 21a and TEX. R. APP. P. 25.1 (e), I hereby certify
that a true and correct copy of the foregoing instrument has been served upon the
following:

          Kevin M. Dills
          Davidson, Meaux, Sonnier & McElligot
          810 South Buchanon St.
          P.O. Box 2908
          Lafayette, LA 70504

          Rick Oldenettel
          Oldenettel & McCabe
          510 Bering, Suite 675
          Houston, TX 77057

BY THE FOLLOWING:

         x               Certified Mail/Return Receipt Requested
                         Telephonic Document Transfer (Fax)
                         Federal Express/Express Mail
                         Hand-Delivery (In Person)
                         First Class Mail

DATE:              January 16, 2015

                                                  /s/ Jennifer E. Michel
                                                  JENNIFER E. MICHEL

4811-9345-2321.1                             16