Summary Judgment Improper upon Failure to Support Enforceability of Qualifying Language in Waiver of Subrogation Clause

Guidry v. Noble Drilling Servs., 2018 WL 4462581, 2018 U.S. Dist. LEXIS 146119 (E.D. La., Sept. 18, 2018)

By: Eric M. Whitehead

Overview

After denial of a Motion for Summary Judgment in August 2018, Defendant, Noble Drilling Services, Inc., et al (“Noble”), moved for reconsideration of the court’s denial of summary judgment which sought dismissal of the intervention by plaintiff’s Longshore and Harbor Workers’ Compensation Act (LHWCA) insurer. Upon reevaluation of Defendant’s supporting documents, the court DENIED the motion for reconsideration thereby maintaining the denial of summary judgment issued in the court’s Order and Reasons on August 28, 2018.

Facts

Plaintiff, Glen Guidry, was employed as a field service representative of Shell Oil Co. (“Shell”) casing operations subcontractor, VAM USA, LLC (“VAM”), aboard the Noble-owned drill ship, NOBLE BULLY 1. Guidry sustained multiple physical injuries after slipping on the mud-covered drilling floor while inspecting joint casing during operations. He then sued Noble for negligence seeking relief under general maritime law and the LHWCA. VAM’s LHWCA insurer, Liberty Insurance Corp. (“Liberty”), subsequently paid Guidry’s compensation and medical expenses and intervened in the suit seeking reimbursement in the amount paid to Guidry for those payments.

Prior History

Prior to this reconsideration, both Plaintiff Guidry and Defendant Noble moved for summary judgment to dismiss the intervention of Liberty on the grounds that Liberty waived its contractual right of subrogation. The referenced waiver was included within a separately executed agreement between VAM and Shell. The Shell/VAM agreement provided that: “All CONTRACTOR’s insurances shall be endorsed to provide that underwriters waive any rights of recourse, including in particular, subrogation rights against OTHER CONTRACTOR GROUP to the extent of the obligations assumed by CONTRACTOR herein.” The court first addressed and dismissed Guidry’s motion upon finding that Guidry did not fall within the contract’s definition of “OTHER CONTRACTOR” because the definition specifically excludes employees of the “COMPANY” (Shell) or “CONTRACTOR GROUP” (VAM as subcontractor). Next, the court determined that, unlike Guidry, Noble were “OTHER CONTRACTORS” under the contract through its work/service agreement with Shell and by virtue of not being members of VAM or Shell. Accordingly, Liberty would agree to waive its right of subrogation under the contract against Noble, but only to “the extent of obligations assumed by [VAM].” Upon clarifying the parties’ classifications under the contract, the court denied Noble’s motion for summary judgment for two reasons: (1) Noble failed to show VAM assumed any obligation respecting subrogation rights towards Noble or other contractors or (2) provide any alternative meaning of the clause conditioning Liberty’s waiver of subrogation on VAM assuming any requisite obligation respecting Noble. Consequently, the court DENIED Noble’s motion for summary judgment in its August 28, 2018 Order and Reasons.

Analysis

The motion to reconsider the court’s denial of summary judgment before the court in this proceeding was of a virtually identical substantive nature as the first. The foundation of this proceeding and the alleged dispositive issue bolstering Noble’s motion for summary judgment again concerned the VAM/Shell contract that provided for Liberty’s waiver of subrogation rights against Noble to the extent of obligations assumed by VAM. In its motion for reconsideration, Noble alleged that the court may have “inadvertently overlooked” a section in its previously filed reply memo discussing Noble’s assertion that the VAM/Shell contract contained a provision that qualified Liberty’s waiver of subrogation. The court stated that although Noble’s reply memo referenced the qualifying language in the contract, it failed to identify any obligation assumed by VAM that would necessitate Liberty’s waiver of subrogation against Noble. Furthermore, the court again noted that Noble’s supporting documents failed to propound any assertion to support a finding that the qualifying language lacks meaning. Accordingly, the court reaffirmed its position that summary judgment was improper regarding Liberty’s intervention without demonstrating the enforceability of the waiver of subrogation clause through any conditioned obligation or lack of meaning within the qualifying language. For the aforementioned reasons set forth in this decision and in its August 28, 2018 Order and Reasons, the court DENIED Noble’s motion for reconsideration.