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Daniels v. International Paper Co.

Court of Appeals of Louisiana, Second Circuit

November 3, 2017

JOHN C. DANIELS, ET AL. Plaintiffs-Appellees
v.
INTERNATIONAL PAPER COMPANY Defendant-Appellant

         Appealed from the Forty-Second Judicial District Courtfor the Parish of DeSoto, Louisiana Trial Court No. 75485 Honorable Charles Blaylock Adams, Judge.

          KEAN MILLER LLP By: Scott L. Zimmer, William H. Priestley, Jr. Counsel for Appellant International Paper Company.

          BARRASSO, USDIN, KUPPERMAN, FREEMAN & SARVER, L.L.P.By: H. Minor Pipes, III Susan M. Rogge, Counsel for Appellee Security National Insurance Company.

          THOMAS, SOILEAU, JACKSON, BAKER & COLE, L.L.P., By: Steven E. Soileau, Counsel for Third Party Appellee L&R Timber Co., Inc.

          CHARLES S. NORRIS, JR. JOSEPH PAYNE WILLIAMS, CHRISTOPHER JOEL NORRIS, Counsel for Appellees John C. Daniels and Jennifer Daniels.

          Before DREW, STONE, and COX, JJ.

          DREW, J.

         In this matter involving a third-party demand for indemnification, defense, and insurance coverage, International Paper Company ("IP") appeals a summary judgment dismissing its claims against L&R Timber Co., Inc. ("L&R").

         We reverse the judgment in part, affirm in part, and remand.

         BACKGROUND

         In April of 2011, IP and L&R executed a "Master Wood Purchase and Service Agreement" ("Agreement") under which L&R agreed to sell, deliver, cut, convert, and/or transport forest products to IP's facilities or other designated destinations for acceptance and/or purchase by IP.

         The Agreement required L&R to make IP an additional insured on its Commercial General Liability and Automobile Liability policies. The contract also contained an indemnification clause, which provided:

13. Indemnity: (a) Seller agrees to defend, indemnify, and hold Buyer harmless from and against any and all claims, losses, demands, liens, causes of action or suits, judgments, fines, assessments, liabilities, damages and injuries (including death) of whatever kind or nature, including to all persons or property, arising out of, on account of, or as a result of, directly or indirectly, Seller's or its subcontractors' operations, performance or nonperformance under this Agreement, whether or not caused or alleged to have been caused, in whole or in part, by the negligence of Buyer. Without limiting the generality of the foregoing, Seller specifically agrees to defend Buyer in any suit against Buyer (regardless of whether Seller is also a party to the suit) arising out of, on account of, or resulting directly or indirectly from Seller's or its subcontractors' operations, performance or nonperformance under this Agreement. Seller hereby waives, as against Buyer, any immunity from suit afforded by applicable workers compensation laws.
(b) At Buyer's request, Seller shall provide to Buyer at Seller's expense, a complete defense of any such claim, demand, cause of action, or suit, and Seller shall bear all attorneys' fees; costs of defense; court costs; expert, discovery and investigative fees; and costs of appeal, all to the end that Buyer shall incur no costs or expense of any kind associated with the full and complete defense of any such claim, demand, cause of action or suit, or of enforcing Seller's compliance with this paragraph 13. Seller agrees that Buyer has the right to be represented by separate counsel of its own selection, at Seller's sole expense. Buyer's exercise of its right to select its own separate counsel will in no way diminish or release Seller's obligation to indemnify and hold Buyer harmless.
(c) Except in jurisdictions where prohibited by law, Seller agrees that its duty to defend, indemnify, and hold Buyer harmless is not dependent upon Seller's fault or negligence. Seller's duty to defend, indemnify and hold Buyer harmless exists for each and every claim or suit that arises out of, or in any way relates to, Seller or its subcontractor's operations, performance, or nonperformance under this Agreement. Similarly, except in jurisdictions where prohibited by law, Seller agrees to defend, indemnify and hold Buyer harmless from and against any claim of liability to Seller's employees, and Seller hereby waives any immunity under workers compensation laws to the extent necessary to give effect to this provision.
(d) Seller agrees that its duties and obligations under this paragraph 13 are distinct from, are independent of, and are not intended to be coextensive with, its duty to procure the insurance coverage required by the terms of this Agreement.

         On November 20, 2012, L&R and John Daniels entered into a "Logging and Fiber Supply Hauling Contract" under which Daniels agreed to transport forest products and related commodities. Daniels also agreed to assume sole responsibility for unloading his trailers at all destination points.

         On May 15, 2013, Daniels drove a truck delivering a load of wood chips for L&R to IP's mill in Mansfield, Louisiana. He asserted that on the instructions of IP's employees, he drove his truck onto a scale, exited his truck, and then went to the scale house to pick up his scale ticket. As he attempted to reenter his truck, the catwalk on which he was required to walk collapsed, causing him to land on his knees and sustain injuries to his knees and lower back.

         Daniels filed suit against IP on April 9, 2014. He argued that the catwalk was in the care, custody, and control of IP, that IP knew or should have known of the defective condition of the catwalk, and that IP failed to exercise reasonable care by failing to inspect and repair it. He asserted that IP was liable for his damages in accordance with La. C.C. arts. 2315, 2317, and 2317.1.

         On April 6, 2015, IP filed a third-party demand against L&R in which it asserted that under the terms of the Agreement: (i) IP was to be an additional insured on the Commercial General Liability and Automobile Liability policies maintained by L&R; (ii) L&R was to indemnify IP against Daniels' claims; and (iii) L&R agreed to provide IP with a complete defense against Daniels' claims.

         L&R filed an exception of prematurity against the third-party demand. It also filed an incidental demand against Daniels, asserting that the contract between Daniels and L&R contained a provision that Daniels agreed to indemnify and hold L&R harmless from any and all claims resulting from Daniels' operations. The exception of prematurity was denied.

         On May 6, 2016, IP amended its third-party demand to allege that L&R had breached its obligations under the Agreement to provide a defense to IP against Daniels' claims and to name IP as an additional insured on its policies. IP contended that even though L&R obtained an endorsement to its CGL policy listing IP as an additional insured, L&R did not obtain the specific coverage required by the agreement.

         IP also filed a third-party demand against Security National Insurance Company ("Security"), L&R's liability insurer. IP alleged that under the CGL policy, Security had a duty to defend and indemnify IP, as an additional insured, for the alleged damages in Daniels' suit.

         Security filed an answer and affirmative defenses in response to IP's third-party demand. Security denied that IP was named an additional insured under the policy. Among Security's defenses was that it did not owe IP a defense or indemnity under the policy because IP was not a named insured or named additional insured, or otherwise qualified as an additional insured following a change endorsement effective December 9, 2012.

         L&R filed a motion for summary judgment against IP's third-party demand. L&R contended that because most of the wood harvested was from Texas, Texas law should be used to interpret the Agreement. L&R argued that the indemnification provisions did not meet the fair notice requirements under Texas law. L&R also argued that if Louisiana law applied, the Agreement should be deemed unenforceable as a matter of law as a contract of adhesion because it was created without L&R's input, contained very small print, and put L&R in the disadvantageous position of being required to sign the contract without a meeting of the minds or lose the business opportunity. Finally, L&R contended that it did not intend to indemnify IP against liability arising from premises defects on IP's property over which L&R had no care, custody, or control.

         IP filed an opposition to the motion for summary judgment as well as its own cross-motion for summary judgment. L&R filed an opposition to ...


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