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Gulf Crane Services, Inc. v. Blue Fin Services, LLC

United States District Court, S.D. Texas, Houston Division

April 1, 2019

GULF CRANE SERVICES, INC., Plaintiff,
v.
BLUE FIN SERVICES, LLC, Defendant.

          ORDER

          Andrew S. Hanen, United States District Judge.

         The Court has before it the Memorandum and Recommendation of the United States Magistrate Judge (Doc. No. 29) and the Objections filed by the Defendant Blue Fin Services, LLC (hereinafter "Blue Fin") (Doc. No. 31) and those filed by Plaintiff Gulf Crane Services, Inc. (hereinafter "Gulf Crane") (Doc. No. 32). The Court will review the Memorandum and Recommendation de novo.

         I.

         Blue Fin's objections are somewhat evidentiary and/or ministerial in nature in that neither is grounds for not adopting the Memorandum and Recommendation. First, it objects to the statement that it breached "its obligation to procure additional insurance coverage for Gulf Crane." This statement was made in the context of the Plaintiffs argument that Blue Fin was obligated to name Gulf Crane as an additional insured-an obligation which Blue Fin does not deny and which it conceded it did not fulfill. That being said, the Magistrate Judge did not recommend any relief based on this statement, nor is any judgment contemplated on the basis of this statement. This Court, in adopting the Memorandum and Recommendation, is not hereby adopting that statement as a finding (or as a basis for any relief), nor is it holding that it is inaccurate-as that fact, if it is a fact, does not impact this order, and this Court reserves any ultimate resolution of this concern for later development as this case progresses. The same can be said for Blue Fin's other objection to the Memorandum's characterization of its $500, 000 offer to Gulf Crane, Gulf Crane's rejection of same, and the timing of both vis-a-vis the underlying settlement. These "facts" are immaterial to this order. Again, they have no impact on any issue currently before this Court and, given the interlocutory status of this case, can be resolved at a later point.

         II.

         Gulf Crane's objections are more substantive and are directed at the ultimate issues decided by the Memorandum. Its primary objection is that the Memorandum finds that Texas law applies to this incident instead of maritime law. It also objects to the failure of the Magistrate Judge to grant a summary judgment on Blue Fin's failure to "procure insurance for Gulf Crane."

         The Court takes the latter objection first. Gulf Crane says it has proven $106, 251.19 damages in defense costs and "a significant amount of damages in settling the Mata lawsuit" and that these damages total less than the $6, 000, 000 limit of the coverage obtained by Blue Fin. This may all be true. The Magistrate Judge did not grant the judgment-not because of the lack of damages, but because no party provided her with competent summary judgment evidence showing what was left on the $6, 000, 000 policy, nor did any party prove with specificity the totality of damages that might be due under the breach of contract theory. This omission will no doubt easily be cured by a later motion. (The Court notes that Plaintiffs Motion for Summary Judgment requests a full summary judgment and not a partial one, so the Court did not award a partial summary judgment on liability.)

         With regard to the more substantive objection (which controls whether there is a limitation on indemnity as contemplated under Texas law or unlimited indemnity as would be the case under maritime law), Gulf Crane complains first that the Magistrate Judge should not have used the Doiron test to resolve the issue. See In re Larry Doiron, Inc., 879 F.3d 568 (5th Cir. 2018). Second, it complains that even if one reaches the conclusion that the Doiron test controls, the Memorandum wrongly applied the test. This Court overrules both objections.

         First, Fifth Circuit authority subsequent to Doiron makes it clear that the Doiron test controls here. In In re Crescent Energy Services, LLC, 896 F.3d 350 (5th Cir. 2018), Judge Southwick, the author of the original panel decision in Doiron, writing for the Crescent panel, had to decide a similar issue: whether a contract was a maritime contract. If it was, just as argued here, no state law indemnity limitations applied. (In Crescent it was Louisiana law at issue.) To reach that decision, the Fifth Circuit used its recently-decided decision in Doiron. It started by describing the pre-Doiron state of the law by quoting an academic analysis:

Professor Robertson described the purposes of Davis in a more limited way than would this court, but it is the purpose relevant to this case:
The OCS [Outer Continental Shelf] oil patch is latticed with contracts and subcontracts. Litigation arising from injuries to OCS workers ordinarily entails claims for contractual indemnity among the putative tortfeasors. Whether a contract calling for indemnity is maritime or not is a recurrently dispositive question. "[I]f the contract is a maritime contract, federal maritime law applies of its own force, and state law does not apply." If the contract calling for indemnity is not a maritime contract, the governing law will be adjacent-state law made surrogate federal law by OCSLA § 1333(a)(2)(A). Very often the applicable adjacent-state law will be that of Texas or Louisiana.
Both Texas and Louisiana have anti-indemnity statutes that will invalidate most indemnity contracts. Federal maritime law, on the other hand, shows no hostility to indemnity agreements[.]
The Fifth Circuit regularly complains about how difficult it is to tell whether an OCS indemnity contract is maritime. In Davis & Sons, Inc. v. Gulf Oil Corp. Judge Rubin made a heroic effort to synthesize the circuit's jurisprudence into something that made sense ....
Id. at 542-43 (footnotes omitted). The good professor concluded that despite being heroic, the effort in Davis failed. The en banc court in Doiron, after 25-plus years of applying Davis, at ...

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