Opinion
Civil Action No. 01-2397 SECTION "C"(5)
February 18, 2003
ORDER AND REASONS
Before the Court is Defendant's, Bunge North America, Inc.'s ("Bunge") Motion for Partial Summary Judgment, requesting the Court to find that River Construction Company, Inc. ("River Construction") is contractually obligated to reimburse Bunge for defense costs and attorney's fees incurred defending claims made against it in this matter by Plaintiff. For the following reasons, Bunge's motion for partial summary judgment is GRANTED.
I. Background
On July 11, 1998 Bunge and River Construction entered into a construction contract (the "Contract"). (Rec. Doc. 98, Ex. 1). The Contract required River Construction to provide labor and equipment to repair a dock belonging to Bunge. The Contract also provided that River Construction would name Bunge as an additional insured on River Construction's comprehensive and commercial general liability insurance policies. Additionally, Bunge contends that River Construction agreed "to fully protect, defend and indemnify Bunge against all claims made by River Construction's employees arising out of River Construction's performance of its work under the Contract." (Rec. Doc. 98, p. 2).
Subsequently, an employee was injured during this endeavor and on August 6, 2001, his surviving wife filed the above captioned suit, naming both Bunge and River Construction among the defendants. On October 15, 2001, Bunge made demand on River Construction to defend and indemnify it against claims by Plaintiff in this action. After River Construction failed to agree to provide defense and indemnity, Bunge filed a Cross-Claim against River Construction on July 25, 2002.
On October 7, 2002, the Court granted Bunge's motion for summary judgment dismissing Plaintiff's claims against it with prejudice. Likewise, on October 11, 2002, the Court granted River Construction' s motion for summary judgment dismissing Plaintiff's claims against it with prejudice.
II. Analysis
Under Louisiana law, contracts have the effect of law between the parties and must be performed in. good faith. La. Civ. Code art. 1983. "Contract interpretation is the determination of the common intent of the parties." La. Civ. Code art. 2045. "When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent." La. Civ. Code art. 2046.
Paragraph 8 of the Contract provides:
Indemnification
The Contractor [River Construction] shall save and hold Owner [Bunge], its parents and subsidiaries safe and harmless from and against all liability, claims, and demands on account of personal injuries, including death or property loss or damage to others (including but not limited to the contractor and his employees) arising out of or in any manner connected with the performance of this Agreement, whether such injury, loss or damage shall be caused by the negligence of the Contractor, his subcontractor or any other party for whom the Contractor is responsible. The Contractor shall defend any and all actions based hereon and shall pay all costs, expenses and attorney's fees arising therefrom, provided that this indemnity shall not apply to any damages caused by owner's negligence. If Owner, its parents and subsidiaries are required to incur any expense, including attorney's fees, to defend any action which the contractor has hereby undertaken to defend, the Contractor shall reimburse Owner, its parents and subsidiaries such expense.
(Rec. Doc. 98, Ex. 1, ¶ 8). Bunge submits that the language in Paragraph 8 obligates River Construction to defend Bunge from "all liability, claims and demands on account of personal injury, including death . . . arising out of or in any manner connected with the performance of this Agreement." ( Id.). Paragraph 8 also states, "[River Construction] shall defend any and all actions based hereon and shall pay all costs, expenses and attorney's fees arising therefrom." ( Id.).
River Construction counters that "Bunge seeks indemnification from River Construction for attorney's fees and costs incurred by Bunge as a result of defending this action." (Rec. Doc. 101, p. 2). In essence, River Construction argues that attorney's fees and costs are subsumed in the term, "indemnity." Also, River Construction submits that its duty to indemnify attaches only if River Construction is found negligent. It urges that the indemnification agreement applies, "whether such injury, loss or damage shall be caused by the negligence of the Contractor, his subcontractor, or any other party for whom the Contractor is responsible." Both sides agree that no obligation to indemnify would apply to any damage caused by Bunge's negligence.
River Construction's interpretation of the Contract is unpersuasive. First, the Court recognizes that Paragraph 8 contains three sentences. The first sentence addresses indemnification and provides that River Construction shall indemnify Bunge for "all liability, claims and demands on account of personal injuries . . . loss or damage." ( Id.). The clause at issue, "whether such injury, loss or damage shall be caused by the negligence of the Contractor . . .," requires River Construction to indemnify Bunge "whether" River Construction or any of its subcontractors are found negligent; it does not limit the obligation to indemnify "only if" River Construction is found negligent. ( Id.) Further, this qualification modifies only the first sentence of Paragraph 8, which addresses indemnity as that term is commonly defined.
The second and third sentences address River Construction's obligation to defend. The language here unambiguously obligates River Construction to "defend any and all actions based hereon," and reimburse Bunge for "any expense including attorney's fees, to defend any actions." There is nothing in the Contract or these two sentences predicating River Construction's obligation to defend on a finding of negligence. In fact, the only limitation in the Contract occurs if Bunge is found negligent. ( Id.) ("[T]his indemnity shall not apply to any damage caused by owner's negligence.").
Bunge was not found negligent by the Court. Similarly, the Court found that River Construction as vessel owner was not negligent, however, this finding is of no moment because River Construction's obligation to defend Bunge is not contingent on a finding that River Construction was negligent. The obligations undertaken by River Construction and Bunge are unambiguously set forth in the Contract, and according to its terms, River Construction is obligated to pay the defense costs and attorney's fees incurred by Bungee in this litigation.
In granting summary judgment for River Construction, the Court determined that River Construction was not negligent as a vessel owner under 33 U.S.C. § 905(b), however, the Court did not consider River Construction's liability as employer. ( See Rec. Doc. 87). Under the Longshoreman and Harbor Worker's Compensation Act, 33 U.S.C. § 901 et seq. ("LHWCA"), River Construction as employer enjoys statutory immunity from claims of personal injury brought by or on the behalf of its employees and survivors. ( See LHWCA § 904)
Also, the Court is unpersuaded by River Construction's argument that the Contract is unenforceable because it was onerous and due to duress. Under Louisiana law, [a] contract is onerous when each of the parties obtains an advantage in exchange for his obligation." La. C.C. art. 1909. Onerous contracts are valid and enforceable unless contrary to public policy. See Givens v. Washington Nat. Ins. Co., 170 So. 810, 812 (La.App. 1936); see also Medical Adjustment Bureau, Inc. v. Garrett, 420 So.2d 223, 225 (La.App. 3 Cir. 1982) ("Parties may not repudiate a contract because it is uneconomic or imprudent."), writ denied, 423 So.2d 1167 (La. 1982). River Construction has failed to allege any facts or provide competent evidence to support its contention that the Contract was onerous. River Construction is a sophisticated business entity and freely entered into the Contract with Bunge. Further, contractual provisions providing for indemnification and defense are common insurance standards and in no way violate public policy.
On January 13, 2003, River Construction filed an Amended Answer raising as an affirmative defense the "statutory provisions of the Louisiana Insurance Guaranty Association Act," and (1) that the Contract is onerous; and (2) it was forced to sign the defense and indemnification clause. ( See Rec. Doc. 114).
Likewise, the Court is unpersuaded by River Construction's argument that the Contract should be vitiated by duress. Under Louisiana law, a contract can be avoided "by duress of such a nature as to cause reasonable fear of unjust or considerable injury." La. C.C. art. 1959. "Duress results when `a person makes an improper threat that induces a party who has no reasonable alternative to manifest his assent.'" Reimonenq v. Foti, 72 F.3d 472, 478 (5th Cir 1996), citing, La. C.C. art. 1959, official comment (b); see also, Averette v. Industrial Concepts, Inc., 673 So.2d 642, 645, n. 4 (La.App. 1st Cir. 1996) (citing La. C.C. art. 1959, Official comment (b), "[l]egal duress occurs when one's agreement to contract is obtained by an improper threat, and there is no reasonable alternative but to assent."). The party seeking to avoid the contract bears the burden of proof by a preponderance of the evidence to support its claim of duress. See La. C.C. art 1831; Dugas v. Modular Quarters, Inc., 561 So.2d 192, 201 (La.App. 3rd Cir. 1990).
Again, River Construction fails to support the allegation of duress with competent evidence for summary judgment. The attached affidavit of William Weidner, III, President of River Construction does not create a genuine issue of material fact. Weidner states that "in order to obtain said work under [the Contract] . . . he was forced to sign the indemnification and defense clause." (Rec. Doc. 101, Ex. A). This statement does not establish duress, it merely establishes the fact that Paragraph 8 was a required condition to the Contract. As a sophisticated business entity, River Construction could have refused to execute this agreement had it not wanted to provide defense and indemnity to Bunge.
According to Bunge, the parties have executed a total of seven contracts, two before and four after the Contract at issue herein, all seven of which have included the exact same defense and indemnity clause. ( See Rec. Doc. 115, pp. 6-7).
Finally, River Construction suggests that it would be premature for the Court to render a decision on this issue because (1) Bunge "has not answered discovery directly related to the issues presently pending"; and (2) whether the Louisiana Insurance Guaranty Act ("LIGA") orovisions apply "cannot be answered at this time, since Bunge has not provided an answer as to whether or not there is insurance for the request at issue." (Rec. Doc. 121).
First, River Construction is requesting the Court delay decision on Bunge's motion for partial summary judgment without filing a proper Rule 56(f) motion. Second, in support of this improper request, River Construction alludes to a prospective affirmative defense pursuant to the LIGA without any evidentiary support in the record upon which such an defense is grounded.
III. Conclusion
Under the circumstances presented, the language of the Contract obligates River Construction to reimburse Bunge for defense costs and attorney's fees incurred defending claims made against it in this matter. Further, there is no evidence that the Contract was onerous or that River Construction was under duress. Accordingly, upon review of the motions, memorandum, the record as a whole and the applicable law, IT IS ORDERED that Defendant's, Bunge North America, Inc.'s Motion for Partial Summary Judgment is GRANTED.