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In re Crescent Energy Services, LLC

United States District Court, E.D. Louisiana

June 8, 2017

IN RE CRESCENT ENERGY SERVICES, LLC

         SECTION: “H” (Applies to all consolidated matters)

          ORDER AND REASONS

          JANE TRICHE MILAZZO UNITED STATES DISTRICT JUDGE

         Before the Court are Defendant Starr Indemnity's Motion for Summary Judgment (Doc. 307), Defendant Carrizo's Motion for Summary Judgment (Doc. 317), Defendant Lloyd's Motion for Summary Judgment (Doc. 320), and Defendant Starr's Motion for Summary Judgment (Doc. 333). For the following reasons, Defendant Lloyd's Motion for Summary Judgment is GRANTED and the other motions are DENIED.

         BACKGROUND

         This is a limitation action brought by Crescent Energy Services, LLC (“Crescent”) as owner of the S/B OB 808. On February 13, 2015, Claimant Corday Shoulder, a pump operator employed by Crescent aboard the S/B OB 808, was severely injured in a well blowout. Crescent was hired by Carrizo Oil & Gas, Inc. (“Carrizo”) to plug and abandon one of Carrizo's offshore wells. Before the accident, Shoulder attached a piece of pipe to Carrizo's well and screwed the pipe into a flange. When Shoulder began releasing pressure from the well, the pipe separated from the flange, severely injuring Shoulder's leg and resulting in an above-the-knee amputation.

         In response to the accident, Crescent filed a limitation of liability action, in which both Shoulder and Carrizo filed claims. In addition, Carrizo filed a cross-claim against Crescent and third-party claims against Crescent's insurers: Liberty Mutual Insurance Company, Starr Indemnity & Liability Company (“Starr”), Torus National Insurance Company (“Torus”), and Certain Underwriters at Lloyd's of London (“Lloyd's”). Carrizo alleges that it is entitled to contractual indemnity from Crescent and coverage as an additional insured from Crescent's insurers pursuant to its Master Service Agreement (MSA) with Crescent. Shoulder likewise filed a third-party complaint against the aforementioned insurance companies.

         On November 7, 2016, the Court ruled on a series of motions for summary judgment, holding that general maritime law applied to the MSA and refusing to dismiss the indemnity claims brought by Carrizo against Crescent's insurers. On December 14, 2016, the parties agreed to a partial settlement. All claims by Shoulder and against Torus were resolved. The remaining parties reserved rights to pursue claims relating to attorney's fees and policy coverage. The latter is at issue here. Starr, Carrizo, and Lloyd's have each filed a motion for summary judgment on the issue of whether Crescent's policy with Lloyd's provides coverage to Carrizo as an additional assured. This Court will discuss their arguments in turn.

         LEGAL STANDARD

         Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”[8] A genuine issue of fact exists only “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”[9]

         In determining whether the movant is entitled to summary judgment, the Court views facts in the light most favorable to the non-movant and draws all reasonable inferences in his favor.[10] “If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial.”[11] Summary judgment is appropriate if the non-movant “fails to make a showing sufficient to establish the existence of an element essential to that party's case.”[12] “In response to a properly supported motion for summary judgment, the non-movant must identify specific evidence in the record and articulate the manner in which that evidence supports that party's claim, and such evidence must be sufficient to sustain a finding in favor of the non-movant on all issues as to which the non-movant would bear the burden of proof at trial.”[13] “We do not . . . in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.”[14] Additionally, “[t]he mere argued existence of a factual dispute will not defeat an otherwise properly supported motion.”[15]

         LAW AND ANALYSIS

         A. Starr's Motions for Summary Judgment

         Starr, which provides an umbrella policy to Crescent, has filed two Motions for Summary Judgment, asking this Court to find that the Lloyd's policy provides coverage to Carrizo. Curiously, though, Starr has not filed any claim against Lloyd's, and Lloyd's argues that it therefore should not be allowed to move for summary judgment against it. This Court agrees. The only claim at issue in Starr's motions is Carrizo's claim against Lloyd's. Starr has not brought a claim against Lloyd's on which it can seek judgment, and it has no standing to move for judgment on Carrizo's behalf. Accordingly, these motions are denied.

         B. Carrizo's and Lloyd's Cross-Motions for Summary Judgment

         In its Motion, Carrizo argues that the Hull/Protection and Indemnity Policy (“the Policy”) provided to Crescent by Lloyd's covers Carrizo for its potential liability in this matter. The Policy insures Crescent for any liabilities it may incur as owner of the vessel, the OB 808. Shoulder was a member of the crew of the OB 808, which was performing plug and abandon work on Carrizo's well at the time that Shoulder was injured. Carrizo argues that the Policy provides it coverage in two ways: (1) as an additional insured, and (2) for Crescent's contractual liability to Carrizo. This Court will address each argument in turn.

         I. Additional Insured Coverage

         Carrizo argues that it is an additional insured on the Lloyd's P & I policy because the MSA required that Crescent add it as an additional insured on all of its insurance policies. Lloyd's P & I policy explicitly covers Crescent for any liabilities it may incur “as owner” of the OB 808. Carrizo argues that under the Policy the MSA's requirement that Carrizo be added as an additional insured renders the “as owner” clause of the Policy deleted, thereby expanding coverage to Carrizo. Lloyd's disputes this reading of the Policy but argues that even if the “as owner” clause is deleted, the Policy does not provide coverage to Carrizo for a myriad of other reasons. Most notably, Lloyd's argues that the Policy's coverage does not extend to cover liabilities beyond vessel operations. Because this Court ultimately finds this argument compelling, it need not address the parties' additional arguments.

         There are two provisions relevant to Lloyd's argument that the Policy's coverage is limited to liabilities arising out of vessel operations. The first states that:

In respect to any/all Additional Assureds named herein, it is noted and agreed, where required by written contract; . . . (2) Any reference to “other Than Owner”, “As Owner” and/or “other Insurance” clauses contained in this policy shall be deemed deleted. Notwithstanding, if a claim is made by anyone other than the Owner and/or Operator of the Vessel(s) insured hereunder, such person or entity shall not be entitled to wider coverage than ...

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