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Legal Watch: Volume 3
Prepared by William H. BodeCase Summary: Plaintiff sued the owner and charterer of the M/V MIKE MARTIN ELEVATOR, a jack-up rig operating in the South Pass 27 in the Gulf of Mexico, after Plaintiff was injured while servicing the rig. As a result of built-up pressure, the rig erupted in flames, and Plaintiff was injured. Plaintiff's injuries were exacerbated as a result of the lack of working fire extinguishers on the MIKE MARTIN ELEVATOR. The MIKE MARTIN ELEVATOR was owned by Elevating Boats, LLC ("Elevating Boats"), and chartered by Energy Partners Ltd. ("Energy Partners"). Plaintiff sued both Elevating Boats and Energy Partners, and alleged that Defendants violated their duties to provide him with a safe workplace. Plaintiff settled his claims against both Defendants. Elevating Boats subsequently sought indemnification from Energy Partners for its portion of the settlement pursuant to the knock-for-knock indemnity provision contained in their charter agreement. Elevating Boats brought the indemnification action against Energy Partners, Plaintiff's statutory employer, in the Federal District Court in Eastern Louisiana. The Court ruled that, despite the clear knock-for-knock indemnity clause contained in the charter agreement, Elevating Boats was not entitled to indemnification for injuries that occurred as a result of the lack of operative fire extinguishers onboard the MIKE MARTIN ELEVATOR. The Court stated that the lack of operative fire extinguishers onboard the MIKE MARTIN ELEVATOR violated Elevating Boats' warranty of seaworthiness. Further, the Court held that the knock-for-knock indemnity clause was superseded by a charter agreement clause which excludes warranty breaches from indemnification.
Bode & Grenier, LLP
1150 Connecticut Ave., NW
Washington, D.C. 20036
Telephone: 202-862-4300 | Email: email@example.com
OIL RIG OWNER DENIED INDEMNIFICATION FROM CHARTERER AS A RESULT OF OWNER'S BREACH OF SEAWORTHINESS WARRANTY
LESSON: Knock-for-knock indemnity provisions may not provide full protection against liability. Knock-for-knock indemnity provisions provide some protection against potential suits brought by the employees of a charterer or operator. However, the agreement containing the indemnity provision must be carefully reviewed to ensure that property owners are not surprised by liability stemming from exceptions to the knock-for-knock indemnity clause. (Comeaux, et al., v. Coil Tubing Services, et al.)
VESSEL OWNER DENIED DEMURRAGE RECOVERY AS A RESULT OF DELAY IN INITIATING LITIGATION AGAINST CHARTERER
LESSON: Agreements may impose severe time limitations upon parties who suffer harm as a result of contract violations. It is vital that petroleum transporters and terminal operators be vigilant in asserting their contractual rights, lest these rights evaporate as a result of the passage of time. The aggrieved party must initiate litigation within the contractual time limit, even if the aggrieved party continues to maintain other business relationships with the breaching party. (Arcadia Petroleum Ltd. v. Sun International Ltd.)
EMPLOYEE LIMITED TO WORKER'S COMPENSATION INSURANCE BENEFITS AS A RESULT OF WORK-RELATED BLOOD DISORDER
LESSON: Worker's compensation insurance generally provides an exclusive remedy for workers injured while on the job. However, each state maintains individual rules regarding worker's compensation exclusivity, and it is important that employers remain aware of the nuances that apply to their operations and corporate structure. Given the danger of benzene exposure, it is particularly important that terminal operators remain aware of their liability position regarding worker's compensation insurance. In addition, property owners must remain vigilant regarding their duties if they assume responsibility to monitor safety conditions on the property. (Laico, et al., v. Chevron U.S.A., Inc.)
Please address any comments or questions to Mr. Bode at 202-862-4300 or firstname.lastname@example.org.
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