Court Opinion

ID: 9890599
Source: CourtListenerOpinion
Date Created: 2023-10-13 18:01:16.338818+00
Date Added: 2024-06-11T13:25:35.830334
License: Public Domain

Case: 22-30371       Document: 00516930361       Page: 1    Date Filed: 10/13/2023

             United States Court of Appeals
                  for the Fifth Circuit                            United States Court of Appeals
                                                                            Fifth Circuit

                                 ____________                             FILED
                                                                   October 13, 2023
                                   No. 22-30371                      Lyle W. Cayce
                                 ____________                             Clerk

   Certain Underwriters at Lloyds, London

                                                           Plaintiff—Appellant,

                                       versus

   Cox Operating,

                                              Defendant— Appellee.
                    ______________________________

                    Appeal from the United States District Court
                       For the Eastern District of Louisiana
                             USDC No. 2:20-CV-1177
                    ______________________________

   Before Stewart, Dennis, and Southwick,* Circuit Judges.
   Per Curiam:
         Certain Underwriters at Lloyds, London (“Lloyds”) brought an
   intervenor complaint against Cox Operating LLC (“Cox”) seeking to
   recover maintenance and cure benefits Lloyds paid to an injured seaman. Cox
   filed a motion for summary judgment, arguing that Lloyds bears
   responsibility for the payments under a protection and indemnity (“P & I”)
   policy under which Cox is an assured. The district court agreed and granted

         _____________________
         *
             Judge Southwick concurs in the judgment.
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   the motion. Lloyds timely appealed. Because the district court properly
   found that Lloyds is obligated to pay the maintenance and cure under the P
   & I policy, we AFFIRM.
                        I. Factual and Procedural Background
           This intervenor suit arises from an underlying case whereby an injured
   seaman, James Michael Jones, sued Cox and his employer, nonparty Select
   Oilfield Services, LLC (“Select”). Jones brought claims of negligence and
   unseaworthiness based on injuries he sustained while employed by Select on
   a lift boat, the M/V SELECT 102, that Select time chartered to Cox. Jones,
   who was the captain of the M/V SELECT 102, sustained serious head
   injuries when he slipped and fell on a fixed saltwater platform owned by Cox.
   Select provided Jones’s services as part of a Master Services Agreement
   (“MSA”), under which Select agreed to supply Cox with equipment, goods,
   and services to aid in the production of natural gas and oil.
           Pursuant to the MSA, Select agreed to provide Cox with the M/V
   SELECT 102 lift boat, as well as a captain and crew to assist with Cox’s oil
   and gas production in the Eloi Bay Field in St. Bernard Parish, Louisiana.1 As
   relevant to this intervenor suit, Select also agreed to defend and indemnify
   Cox for “all [l]osses of every kind and character arising out of bodily injury,
   illness, death, property damage of [Select], arising out of, in connection with,
   incident to or resulting directly or indirectly from this Agreement or the
   provision of any Services, Goods, or Equipment provided under” the MSA,
   regardless of fault. To cover these indemnity obligations, Select agreed to
   procure insurance policies that included Cox as an additional assured and

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           1
            On its website, Cox describes the Eloi Bay Field as being “[l]ocated in state waters
   of L[ousiana].” Cox, Eloi Bay, https://coxoperating.com/footprint/eloi-bay/ (last
   visited October 12, 2023).

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   contained waivers of subrogation in Cox’s favor. To that end, Select obtained
   a general liability policy with U.S. Specialty Insurance Company
   (“USSIC”), and, as relevant to this appeal, a maritime P & I policy with
   Lloyds.
          The P & I policy provided coverage for “all such loss and/or damage
   and/or expense as the [a]ssured shall as owners of the vessel named herein
   have become liable to pay,” including “hospital, medical, or other expenses
   necessarily and reasonably incurred in respect of loss of life of, personal
   injury to, or illness of any member of the crew of the vessel.” Select had the
   ability to add additional assureds and release from liability “others for whom
   the [a]ssured is performing operations,” and added Cox as an additional
   assured under the policy. Lloyds, in turn, agreed to “waive all rights of
   subrogation against any parties so released.” However, Lloyds also limited
   this waiver of subrogation by including a provision stating that “no party shall
   be deemed an [a]dditional [a]ssured or favoured with a waiver of subrogation
   on any vessel insured hereunder which is not actually engaged or involved in
   the intended operations at the time of loss[.]”
          After Lloyds paid maintenance and cure to Jones under the P & I
   policy, Lloyds filed an intervenor complaint seeking to recoup those costs
   from Cox as the party at fault for Jones’s injuries. Cox filed a motion for
   summary judgment, arguing that Lloyds’s intervenor complaint should be
   dismissed because Lloyds had waived its subrogation rights under the P & I
   policy. The district court granted summary judgment in favor of Cox,
   determining that “[b]ecause Cox was named as an additional insured under
   the P&I policy and because Select released Cox from liability for Jones’s
   injury, Lloyds has no right to recover from Cox through subrogation.” The
   district court rejected Lloyds’s argument that the limitation clause in the
   waiver of subrogation provision applied, finding that the M/V SELECT 102
   was in fact “involved in the intended operations of the parties at the time

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   Jones was injured” since it was at the Eloi Bay Field to assist with Cox’s
   operations, including the service platform, and “the M/V Select 102 was
   actually servicing the oil and gas production facility” on that day.
          Lloyds now appeals the dismissal of its intervenor complaint, arguing
   that the district court erred in ruling in Cox’s favor because the injury did not
   occur on the M/V SELECT 102 and thus was not covered by the P & I policy,
   or alternatively, falls within the clause limiting Lloyds’s waiver of
   subrogation rights.
                              II. Standard of Review
          We review a district court’s grant of summary judgment de novo.
   Tiblier v. Dlabal, 743 F.3d 1004, 1007 (5th Cir. 2014). Summary judgment is
   proper “if the movant shows that there is no genuine dispute as to any
   material fact and the movant is entitled to judgment as a matter of law.”
   Fed. R. Civ. P. 56(a). “[T]his court construes ‘all facts and inferences in
   the light most favorable to the nonmoving party.’” McFaul v. Valenzuela, 684
   F.3d 564, 571 (5th Cir. 2012) (quoting Dillon v. Rogers, 596 F.3d 260, 266 (5th
   Cir. 2010)). The summary judgment movant bears the burden of proving that
   no genuine issue of material fact exists. Latimer v. SmithKline & French Labs.,
   919 F.2d 301, 303 (5th Cir. 1990).
                                   III. Discussion
   A.     The P & I policy covers Jones’s maintenance and cure
          The parties dispute whether the maintenance and cure Lloyds paid to
   Jones was covered by the P & I policy because Jones’s injury did not take
   place on the M/V SELECT 102. Though the district court found that it was
   “undisputed” that Jones’s maintenance and cure fell within the P & I policy,
   Lloyds vigorously denied before the district court, and maintains on appeal,

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   that Jones’s maintenance and cure was not properly covered under the P & I
   policy.
             Lloyds contends that the district court erred in finding Jones’s injury
   to be covered under the P & I policy because the policy covered “only
   liabilities related to vessels that are scheduled under the policy” since the
   policy states that it provides coverage for “all such loss and/or damage
   and/or expense as the [a]ssured shall as owners of the vessel named herein
   have become liable to pay.” The P & I policy includes coverage for claims
   asserted by Jones for “loss of life, injury, and illness,” Lloyds’s argument
   goes, and under Louisiana law2 we must read this language in conjunction
   with the preceding paragraph that limits coverage to losses the assured
   acquires “as owner”3 of the M/V SELECT 102. Naquin, 817 F.3d at 239
   (under Louisiana law insurance contracts “must be interpreted in light of the
   other provisions so that each is given the meaning suggested by the contract
   as a whole”).
             Lloyds cites Naquin for the proposition that where an “as owner”
   clause to a P & I policy remains intact, coverage under the P & I policy only
   extends so far as there is a “causal operational relation between the vessel
             _____________________
             2
             Given that there is no federal maritime rule governing the issues of whether
   Jones’s maintenance and cure benefits are covered by the P & I policy or whether the
   limitation to the subrogation waiver applies here, this court applies Louisiana law as the
   state with the most substantial interest in the application of its state’s laws to the
   interpretation of the P & I policy. Naquin v. Elevating Boats, L.L.C., 817 F.3d 235, 238 (5th
   Cir. 2016) (“In the absence of a specific and controlling federal maritime rule over this
   [marine insurance] dispute, we interpret this maritime insurance contract under Louisiana
   state law.”). Select, the co-signatory of the P & I policy, is a Louisiana-based company, and
   the policy was executed to insure for risks associated with the provision of services on
   coastal waters of Louisiana, which is where Jones was injured.
             3
            While the “as owner” clause was deemed deleted with respect to any additional
   assureds under the P & I policy, additional assureds are nonetheless “not entitled to a
   broader scope of coverage than would be the owner.”

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   and the resulting injury.” Id. at 240 (quoting Lanasse v. Travelers Ins. Co., 450
   F.2d 580, 584 (5th Cir. 1971)). Cox responds that Naquin is inapplicable
   because it only addressed liability coverage under a P & I policy, not an
   insurer’s attempts to recoup maintenance and cure through subrogation.
   Indeed, Naquin involved a third-party complaint by a Jones Act employer
   against its insurers challenging the denial of liability coverage for a land-based
   incident. 817 F.3d at 237–8. There, the court determined that the P & I
   insurer properly denied liability coverage because the employer was not
   liable, as owner of the covered vessel, for the land–based incident that caused
   the seaman’s injury. Id. at 240. Here, in contrast, Lloyds did not provide
   liability coverage under the P & I policy, and the issue instead is whether
   Jones became due maintenance and cure under the policy.
           The court in Naquin relied on Lanasse, which called for “some causal
   operational connection between the vessel and the resulting injury” for the
   provision of maintenance and cure under a P & I policy to fall within a time
   charters’ indemnity provision. 450 F.2d 580. Notably, the indemnity
   provision in the time charter in Lanasse only applied to damages “directly or
   indirectly connected with the possession, navigation, management, and
   operation of the vessel.” Id. at 582 n.4.4 Here, in contrast, the MSA’s
   indemnity provision contained no such limitations, and explicitly applied to
   losses beyond the mere operation of the vessel to cover “all [l]osses of every
   kind and character arising out of bodily injury, illness, death, property
   damage” in connection with Select’s services.

           _____________________
           4
             Judge Brown also cautioned that had the suit, which was between parties to a time
   charter, been a subrogation action brought by an insurer a “serious question” would arise
   as to whether the action would be barred by the anti-subrogation rule, under which “an
   underwriter cannot recover by way of subrogation against its own assured” where the
   policy includes an “explicit policy provision waiving subrogation.” Id. at 585.

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          Select bore the obligation to pay maintenance and cure to Jones as a
   shipowner whose seaman was injured while “in service of the vessel.” Select
   thus became liable to pay Jones maintenance and cure precisely as the
   “owner” of the M/V SELECT 102. Bertram v. Freeport McMoran, Inc., 35
   F.3d 1008, 1013 (5th Cir. 1994) (“shipowner must pay maintenance and
   cure”); Hernandez v. Bunge Corp., 01-1201 (La. App. 5 Cir. 4/10/02), 814 So.
   2d 783, 791, writ denied, 2002-1551 (La. 9/30/02), 825 So. 2d 1193
   (“Maintenance and cure is an obligation imposed upon a shipowner.”);
   Thomas J. Schoenbaum, Admiralty and Maritime Law, § 6–
   28 (6th ed. 2022) (maintenance and cure is the “obligation of a shipowner
   who employs seamen to care for them if they are injured or become ill.”).
          Select’s duty to provide Jones with maintenance and cure exists
   regardless of fault because Jones’ injuries were sustained while he was in
   “service of his ship,” and Select waived its right to recover any such costs
   from Cox under the indemnity provision of the MSA. Warren v. United
   States, 340 U.S. 523 (1951) (seaman entitled to maintenance and cure benefits
   when injured while on shore leave); Noble Drilling Corp. v. Smith, 412 F.2d
   952, 958 (5th Cir. 1969) (“it would be unreasonable to say that a seaman
   working out from our shores in the Gulf of Mexico on a drilling platform,
   which his vessel has the function of servicing, is not also in the service of his
   ship”); Cent. Gulf S. S. Corp. v. Sambula, 405 F.2d 291, 296 (5th Cir. 1968)
   (“the vessel and her owners are liable, in case a seaman falls sick, or is
   wounded, in the service of the ship, to the extent of his maintenance and
   cure”); Bertram, 35 F.3d at 1013 (maintenance and cure “in no sense is
   predicated on the fault or negligence of the shipowner”). Given that Select
   has no right to seek reimbursement of Jones’s maintenance and cure from
   Cox, Lloyds as a subrogated insurer, can have no greater rights as to Cox than
   Select as the subrogor. Travelers Ins. Co. v. Impastato, 607 So. 2d 722, 724 (La.
   App. 4th Cir. 1992) (“Under Louisiana law, a subrogated insurer acquires no

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   greater rights than those possessed by its subrogor and is subject to all
   limitations applicable to the original claim of the subrogor.”).
             Because Select was liable to pay Jones maintenance and cure as
   “owner” of the M/V SELECT 102, such benefits were covered by the P & I
   policy.
   B.        The limitation on Lloyds’s waiver of subrogation does not apply
             Having found that the P & I policy covered Jones’s maintenance and
   cure, we next turn to the status of Lloyds’s right to bring this subrogation
   action considering the waiver of subrogation rights provision5 in the P & I
   policy.6 The district court found that the M/V SELECT 102 was “engaged
   or involved in the intended operations” at the time of Jones’s accident
   because “the M/V Select 102 and its crew were at the Eloi Bay Field to assist
   with Cox’s operations there, including the service platform, and the M/V

             _____________________
             5
             The “Blanket Additional Assureds and Waivers of Subrogation” provision in the
   P & I policy allowed Select to “name others for whom [Select] is performing work as
   [a]dditional [a]ssureds on this [p]olicy,” release any additional assureds from liability, and
   required Lloyds to “waive all rights of subrogation against any parties so released [from
   liability by Select].” The provision also contained a limitation clause stating that
   “[n]otwithstanding the preceding provision, no party shall be deemed an [a]dditional
   [a]ssured or favoured with a waiver of subrogation on any vessel insured hereunder which
   is not actually engaged or involved in the intended operations at the time of loss[.]”
             6
             The parties argue at length over whether Select’s release of Cox in the MSA
   served to also waive Lloyds’s subrogation rights as to Cox. Under Texas law, the law
   applicable to the MSA, “[s]ubrogation rights belong to the subrogated party and are
   waivable only by the insurer,” so Select could not have waived Lloyds’s subrogation rights
   through the MSA. Halliburton Energy v. Ironshore Specialty Ins., 921 F.3d 522, 532 (5th Cir.
   2019). Despite Select’s agreement in the MSA to procure insurance that included a waiver
   of subrogation in Cox’s favor, nowhere in the MSA does Select purport to waive
   subrogation rights on behalf of its insurer. Rather, Select agreed to support its indemnity
   obligations to Cox through an insurance policy in which Cox “is listed as an additional
   insured on and provided a written waiver of subrogation in [Cox’s] favor.”

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   Select 102 was actually servicing the oil and gas production facility on” the
   day Jones was injured.
          Lloyds argues that the district court erred in finding that the vessel
   was engaged in its “intended operations” at the time of the Jones’s incident
   because the “P & I Policy makes waiver of subrogation coextensive with
   coverage.” Yet, having found that Jones’s maintenance and cure was covered
   by the P & I policy, the waiver of subrogation clause also covers Cox as an
   additional assured under the policy. Lloyds insists that the district court’s
   reasoning ignored the plain meaning of the limitation restricting coverage and
   the waiver of subrogation to “vessel operations,” yet nowhere does the
   policy explicitly limit either coverage or the waiver of subrogation to “vessel
   operations.” Instead, coverage extends to “all such loss and/or damage
   and/or expense as the [a]ssured shall as owners of the vessel named herein
   have become liable to pay,” including “hospital, medical, or other expenses
   necessarily and reasonably incurred in respect of loss of life of, personal
   injury to, or illness of any member of the crew of the vessel.” The P & I policy
   limits the waiver of subrogation where a vessel is “not actually engaged or
   involved in the intended operations at the time of loss.” The policy thus limits
   the waiver of subrogation only where the vessel is not engaged in operations
   intended by the parties to the MSA at the time of the loss. Doerr v. Mobil Oil
   Corp., 774 So.2d 119, 124 (La. 2000) (when the words of the insurance
   contract “are unambiguous and the parties’ intent is clear, the insurance
   contract will be enforced as written.”) (citing La. Civ. Code Ann. art.
   2046 (1985)).
          The M/V SELECT 102 was involved in the operations intended by
   Select and Cox at the time of the incident—even if the vessel wasn’t directly

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   involved in the incident.7 Under the MSA, Select and Cox agreed that the
   intended operations of the vessel included “all services, labor and work
   performed by [Select] for the benefit of [Cox] or pursuant to [the MSA] or
   otherwise performed in connection with or without any Goods or Equipment,
   including delivery thereof,” and it is undisputed that the MSA generally
   required Select to “assist with Cox’s operations in the Eloi Bay Field.” At
   the time of Jones’s injury, the M/V SELECT 102 was engaged in its
   “intended operations” in the Eloi Bay as defined under the MSA, and Jones
   was serving Cox in his capacity as captain of the vessel. Even if there were
   ambiguity as to the term “intended operations,” as included in the limitation
   on the waiver of subrogation, any such ambiguity is to be resolved “in favor
   of coverage.” Bonin v. Westport Ins. Corp., 2005-0886 (La. 5/17/06), 930 So.
   2d 906, 911 (citations omitted); Louisiana Ins. Guar. Ass’n v. Interstate Fire &
   Cas. Co., 630 So. 2d 759, 764 (La. 1994) (“ambiguous contractual provision
   is to be construed against the drafter, or, as originating in the insurance
   context, in favor of the insured.”)
           Because the M/V SELECT 102 was engaged in its “intended
   operations” at the time of Jones’s injury and the limitation on the waiver of
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           7
              Lloyds filed a 28(j) letter, arguing that cases applying the “active control duty”
   theory to negligence claims against vessel owners somehow means that the M/V SELECT
   102 was not “actually engaged or involved in the intended operations at the time of the
   loss” as understood under the P & I policy. Under the “active control” doctrine, vessel
   owners have a “a duty to exercise reasonable care to prevent injuries to longshoreman
   working in areas remaining under the ‘active control of the vessel’ or when the vessel owner
   ‘actively involves’ itself in the cargo operations[.]” Fontenot v. United States, 89 F. 3d 205,
   206 (5th Cir. 1996); see also Scindia Steam Navigation Co. v De Los Santos, 451 U.S. 156, 164
   (1981) (“vessel [owner] may be liable if it actively involves itself in the cargo operations and
   negligently injures a longshoreman[.]) While negligence claims are subject to the “active
   control duty,” Manson Gulf, L.L.C v. Mod. Am. Recycling Serv., Inc., 878 F.3d 130, 134 (5th
   Cir. 2017) (noting that “the Supreme Court clarified in Scindia that vessel owner liability
   sounds only in negligence”), maintenance and cure is “in no sense [] predicated on the
   fault or negligence of the shipowner.” Bertram, 35 F.3d at 1013 (internal citation removed).

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   subrogation does not apply, Lloyds waived its subrogation rights as to Cox.8
   The district court properly dismissed Lloyds’s intervenor complaint.
                                           IV. Conclusion
           For the reasons set forth, we AFFIRM the district court’s dismissal
   of Lloyds’s intervenor complaint.

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           8
              Lloyds’s claim is also barred by the anti–subrogation rule, under which “[a]n
   insurer cannot by way of subrogation recover against its insured or an additional assured any
   part of its payment for a risk covered by the policy.” Lloyd’s Syndicate 457 v. FloaTEC,
   L.L.C., 921 F.3d 508, 521 (5th Cir. 2019) (emphasis in original). It is undisputed that Cox
   was an additional assured under the P & I policy, and as discussed above, Jones’s
   maintenance and cure was covered under the P & I policy. Lloyds attempts to evade the
   application of the anti-subrogation rule by pointing to cases that have found the rule to bar
   only subrogation suits that involved waivers of subrogation that did not contain the
   limitation contained in the P & I policy at issue here. However, the limitation on Lloyds’s
   waiver of subrogation does not apply here because Jones’s injuries arose while the vessel
   was engaged in the operations intended by the parties to the MSA.

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