Thibodeaux v. Vamos Oil & Gas Co., 487 F.3d 288 (5th Cir. 2007)

Josh Clemons

While working as roustabouts on an inland drilling vessel, the Freedom, Roy Thibodeaux and Gabino Silva allegedly suffered injuries in the course of their employment. They sued the drilling company under the Jones Act, which gives seamen a cause of action for money damages for personal injuries they suffer on the job.1

The drilling company, Axxis Drilling, filed a claim for indemnity and defense against Maxum Services, Inc., the contract labor provider that employed the ill-starred seamen. The two companies had a Master Service Agreement (MSA) under which Maxum provided workers for Axxis’ drilling business. The MSA provided that Maxum would “protect, defend, indemnify, and hold harmless [Axxis]…from and against all claims, demands, causes of action, cost, expenses, or losses…arising in connection herewith in favor of Maxum’s employees” and also that the MSA would be interpreted under U.S. maritime law.2 If successful, Axxis’ claim would make Maxum liable for the costs associated with the lawsuit, including the damages to Thibodeaux and Silva.

Maxum responded that it did not consent to be subject to the Jones Act because it was not aware that Thibodeaux and Silva would be used in maritime work; and that Louisiana law, under which the indemnity clause is invalid, should be used to interpret the MSA. The Louisiana district court was not persuaded and granted summary judgment in Axxis’ favor. Maxum appealed to the U.S. Court of Appeals for the Fifth Circuit.

The Court of Appeals’ Decision
The court faced a threshold jurisdictional issue regarding Thibodeaux’ claim. Silva’s claim had been settled, making indemnity and defense a “live” issue. The merits of Thibodeaux’s claim, on the other hand, were still being litigated in the lower court. Because Axxis’ liability to Thibodeaux was still in question, the court declared that it would be premature for it to consider the indemnity and defense dispute with respect to his claim. It proceeded to address the issue with respect to Silva’s claim.

The court first observed that the MSA’s language was crystal clear: Maxum agreed to indemnify Axxis against claims brought by Maxum’s employees. Nonetheless, the court was obligated to weigh Maxum’s two arguments for why the MSA should not apply.

Maxum’s first argument was that it did not know that it would potentially be liable under the Jones Act, because it was unaware that Thibodeaux and Silva would be involved in maritime labor, and therefore did not truly consent to the contract. While a mistake that has certain characteristics can render a contract unenforceable, the court found that this was not such a mistake. The MSA clearly stated that maritime law would apply. The court held that Maxum was simply careless and was not entitled to relief on this ground.

Maxum’s second argument was that Louisiana law, and not federal maritime law, should apply because Louisiana law would strike the indemnity clause. Again the court was dismissive, observing that personnel contracts for drilling barges are usually considered maritime contracts and Maxum had nothing more to offer than “a conclusory statement that there are insufficient facts to find that maritime law applies.”3 This argument failed too, and the court upheld the lower court’s decision that Maxum owes indemnity and defense to Axxis.

Endnotes
1. 46 U.S.C. App. § 688.
2. Thibodeaux v. Vamos Oil & Gas Co., 487 F.3d 288, 291-92 (5th Cir. 2007).
3. Id. at 294-95.