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Legal Watch: Volume 5
Prepared by William H. BodeCase Summary: In 2000, James Blackmon, an employee of M-I, LLC, was injured while working on the Chevron Genesis Spar, a work platform. M-I, LLC was a Chevron subcontractor at the time of the incident. On June 29, 2000, Blackmon sued Chevron and M-I in Louisiana, alleging that they were at fault for the accident that caused his injuries. Chevron requested defense and indemnity from M-I in accordance with a Master Service Agreement between the companies that contained indemnity provisions. M-I notified its insurer, AIG. AIG informed Chevron that it believed the indemnity provisions of the Master Service Agreement to be invalid, and settled Blackmon's claims for $2 million. In February 2002, AIG sued Chevron to recover the settlement amount and attorneys' fees. AIG contended that, under Louisiana law, the indemnity provisions of the Master Service Agreement do not apply if Chevron was negligent or at fault for Blackmon's injuries. The United States Court of Appeals ruled against Chevron on February 10, 2005. The Court stated that, under Louisiana law, the indemnity provisions of the Master Service Agreement do not apply if Chevron was negligent or at fault for Blackmon's injuries. Therefore, AIG can recover the settlement amount and attorneys' fees if it proves that Chevron was at fault.
Bode & Grenier, LLP
1150 Connecticut Ave., NW
Washington, D.C. 20036
Telephone: 202-862-4300 | Email: firstname.lastname@example.org
SUBCONTRACTOR NOT REQUIRED TO INDEMNIFY PROPERTY OWNER FOR LIABILITY RESULTING FROM OWNER'S NEGLIGENCE
LESSON: The inclusion of indemnity provisions in Master Service Agreements and other contracts is advisable. However, it is vital to retain competent counsel to determine what, if any, state laws limit indemnity provisions and expose companies to liability for workers' injuries despite clear indemnity provision. This is particularly important as the law of some states permits an insurer to settle a worker's claim, and later seek reimbursement for the settlement amount and attorneys' fees from the property owner. (American Home Assurance Company, et al., v. Chevron, USA, et al.)
OIL AND GAS PLATFORM OWNER NOT LIABLE FOR INJURIES TO SUBCONTRACTOR BECAUSE OWNER DID NOT GIVE ON-SITE ORDERS
LESSON: Companies are generally responsible for the injury of independent contractors on their property only when the company retains control of the manner and method of the contractor's work. Companies should ensure that all work performed under their control by independent contractors is safe. In addition, companies should explicitly refuse to give on-site orders or provide detailed instructions to independent contractors whose safety and work the company does not wish to supervise. (Arsement, Jr., et al., v. Spinnaker Exploration Company, LLC, et al.)
BUYER OF ABANDONED SERVICE STATION ELIGIBLE FOR INSURANCE COVERAGE EVEN THOUGH POLLUTION DISCHARGE DISCOVERED AFTER INSURANCE POLICY EXPIRED
LESSON: The evidence critical to the finding of the Court - that the discharge occurred prior to September 3, 1998 - was actually presented not by the Buyer, but by the Seller who had intervened in the proceeding. Specifically, the Seller retained a professional engineer whose testimony was accepted on the time of discharge. When property is sold where contamination may be an issue, the sales agreement should require that the buyer notify the seller upon the filing of a release report with any environmental authority. By so doing, the Seller can make sure its interests are protected. (Sullivan, Jr. St. Augustine Trust v. Florida Department of Environmental Protection, et al.)
Please address any comments or questions to Mr. Bode at 202-862-4300 or email@example.com.
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