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Richard v. Anadarko Petroleum Corp.

United States District Court, W.D. Louisiana, Lafayette Division

March 24, 2015

RAYLIN RICHARD
v.
ANADARKO PETROLEUM CORP., et al.

RULING

DEE D. DRELL, Chief District Judge.

Pending before the Court is a Motion for Summary Judgment (Doc. 200) filed by Liberty Mutual Insurance Company ("Liberty Mutual"); a Motion for Reconsideration (Doc. 211) filed by Anadarko Petroleum Corp. ("Anadarko"); and a Motion for Reconsideration (Doc. 222) filed jointly by Dolphin Drilling, Ltd. ("Dolphin"), Smith International, Inc. ("Smith"), and Offshore Energy Services, Inc. ("OES"). We have considered the filings and evidence in the record and the parties' arguments contained in their briefs and are prepared to rule on the pending motions. For the following reasons, the Motion for Summary Judgment (Doc. 200) will be DENIED and the Motions for Reconsideration (Docs. 211, 222) will be GRANTED.

I. Background

This lawsuit arises out of an alleged offshore accident on the Belford Dolphin drill ship in connection with the operation of oil and gas leases in the Gulf of Mexico. In June 2008, three companies: (1) Anadarko E&P Company, LP (an independent subsidiary of Defendant Anadarko); (2) Murphy Exploration & Production Company-USA; and (3) Samson Offshore Company entered into a Joint Operating Agreement to develop and produce hydrocarbons in the Green Canyon Area Blocks 432 and 476 ("the Samurai Prospect") (Docs. 79-2, 87). The Joint Operating Agreement designated Anadarko E&P Company as "Operator" of the project. (Doc. 79-2). However, Anadarko E&P Company designated its affiliate, Anadarko, to serve as the general contractor and to engage all subcontractors for the drilling of wells in the Samurai Prospect (Doc. 79-1).

As general contractor, Anadarko hired Dolphin Drilling Ltd. ("Dolphin") to provide drilling services under Dolphin's Offshore Daywork Drilling Contract (Doc. 111-5). Additionally, Anadarko, through preexisting master service contracts, hired OES to provide casing operations (see doc. 111-3) and Smith International, Inc. ("Smith") to supply tubular products and thread representatives (see doc. 111-4) for the Belford Dolphin casing job.

The preexisting master service contract between OES and Anadarko (the "OES-Anadarko Contract") was signed on November 1, 2000 (Doc. 111-3). The contract contained reciprocal indemnity clauses that required OES to indemnify Anadarko, "its Affiliates, its joint owners and venturers, if any, and its and their directors, agents, representatives, employees and insurers and its subcontractors and their employees" for bodily injury to employees of OES or OES's subcontractors and for Anadarko to do likewise (Doc. 74-1).[1] The contract also contained an insurance clause that required each party to carry various types of insurance, including comprehensive general liability coverage for "contractual liability for those liabilities assumed by the Party herein." Id. At the time OES was involved in the Samurai Prospect, OES had a commercial general liability policy with Liberty Mutual (the "Policy") (See doc. 60-3). OES also had purchased a "Blanket Additional Insured Endorsement, " which amended the Policy's definition of "who is an insured" to include "any person or organization for whom [OES has] agreed in writing to provide liability insurance" (Doc. 60-3) (emphasis added).

In June 2009, Plaintiff Raylin Richard, a casing supervisor employed by OES, was struck and injured by a falling joint of casing while on the drill ship Belford Dolphin. Plaintiff brought a tort suit against the companies involved in the drilling operation: Dolphin, Smith, and Anadarko.[2] Dolphin and Smith tendered their defense and indemnification to Anadarko per the indemnity provisions of their individual contracts (See Doc. 87). Anadarko then tendered the defense and indemnification of Dolphin, Smith, and itself to OES. See id.

OES accepted the defense and indemnification of Anadarko, Smith, and Dolphin because OES believed the OES-Anadarko Contract required them to defend and indemnify each of those three companies for liability to an OES employee (Doc. 111). Because OES had so agreed in writing, OES submitted the defense and indemnification to Liberty Mutual for coverage under the Blanket Additional Insured Endorsement. Id.

After OES submitted the insurance claim, Liberty Mutual thoroughly reviewed the contract between OES and Anadarko, allegedly for the first time, and made three important determinations about coverage: (1) Anadarko was an additional insured under the Policy because OES agreed in writing to provide insurance for Anadarko's potential tort liability to Plaintiff Richard; (2) the Policy did not cover contractual liability, including Anadarko's assumed contractual liability to Dolphin and Smith; and (3) Dolphin and Smith were not additional insureds under the Policy because OES only agreed in writing to insure Anadarko's subcontractors and not Anadarko's contractors, which Liberty Mutual determined them to be (See docs. 87, 111, 222). Liberty Mutual concluded that Smith and Dolphin did not qualify as "subcontractors" under the OES-Anadarko Contract after looking at each of Smith's and Dolphin's respective service contracts with Anadarko in which they each were referred to by the defined term "Contractor" (Docs. 111-4, 111-5).

The first paragraph of the Master Service Contract between Anadarko and Smith is as follows:

This Master Service Contract (the "Agreement"), is made this 26 [sic] day of August, 1999, (the "Effective Date"), by and between Anadarko Petroleum Corporation, a Delaware corporation, hereinafter called "Company", and Smith International, Inc. and its affiliated divisions , hereinafter called "Contractor". (Company and Contractor being referred to herein collectively as the "Parties", and individually as a "Party").[3]

(Doc. 11-4). Thereafter, the two companies are referred to throughout the contract only by those defined terms ( i.e., Company, Contractor, Party, and Parties). See id. The first paragraph of the Daywork Drilling Contract between Anadarko and Dolphin is as follows:

THIS DAYWORK DRILLING CONTRACT - OES (the "Contract"), is made between ANADARKO PETROLEUM CORPORATION ("Operator"), a corporation organized under the laws of Delaware, whose address is 1201 Lake Robins Dr., The Woodlands, Texas 77380, and Dolphin Drilling Ltd, ("Contractor"), a corporation organized under the laws of England located at Howe Moss Drive, Kirkhill Estate, Dyce Aberdeen AB21 OGL, UK.

(Doc. 11-5). Thereafter, the two companies are referred to throughout the contract only by those defined terms ( i.e., Operator and Contractor). See id.

A. Procedural History of the Pending Motions

Upon Liberty Mutual's denial of coverage for Dolphin's and Smith's tort liability and Anadarko's contractual liability to them, Anadarko filed a third party complaint impleading OES and Liberty Mutual into the case (Doc. 30). Dolphin also filed a third party complaint against OES and Liberty Mutual (Doc. 32). Liberty Mutual then moved for summary judgment on the third party claims asserted against it (Doc. 60), which Judge ...


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