BP Oil Rig Explosion/Leak

Court Explains the Requirements of a Settlement Agreement

Published on: October 23, 2012 | By Berniard Law Firm

Recently, in the State of Louisiana Court of Appeal for the Third Circuit, a case was decided that effectively laid out the requirements of a settlement agreement. These requirements are especially important because many cases are settled before they get to court. In fact, settlement is often preferable because it saves a significant amount of time, money, and it allows the parties to reach a compromise that they not only come up with themselves, but that is also acceptable to both parties. That way, the parties share the benefits instead of there being a clear-cut loser and clear-cut winner as is usually the situation should a case go to trial.

In this case, an individual was seeking to enforce a settlement agreement with an insurance company regarding a life insurance policy. The life insurance policy involved three beneficiaries; however, it was unclear as to when the money should go to each beneficiary. There may have been a contingent beneficiary. That is, the policy was set up so that if one of the beneficiaries had passed away prior to the money dispersion, then it would go to a different beneficiary. However, the insurance company was unsure of this stipulation, so they did not give out any money at all.

As a result of all of this confusion, one of the beneficiaries entered into negotiations with the insurance company in order to get at least some money out of the life insurance policy. Louisiana Civil Code, Article 3071, defines compromise as “a contract whereby the parties, through concession made by one or more of them, settle a dispute or an uncertainty concerning an obligation or other legal relationship.” Therefore, the parties in this case sought to compromise regarding the payment of the insurance policy.

In addition to defining compromise, the Court also points out that the settlement agreement must be in writing and signed by both parties as required by Louisiana Civil Code Article 3072. In this case, there was an oral agreement, but when the parties attempted to put the terms in writing, there was still dispute regarding the agreeability of quite a few of the terms of the settlement. They created drafts and sent them back and forth, but nothing was ever finalized by way of a signature from either party. The Court recognizes that there are no other cases where a settlement was validated even though neither party signed the final settlement agreement.

The Court also goes on to explain that contracts, which are the basis of a compromise, require that there be a “meeting of the minds.” That is, both parties should completely understand and agree to the terms in the contract. The contract embodies the intention of both parties and if the intention of both sides is not fully included in the settlement, then that settlement cannot be valid. In this case, both sides described other terms that were either not included in the agreement or that appeared, but they did not approve of their inclusion in the settlement. The Court notes that there was no “acceptance and acquiescent from both parties” in this case.

Although the settlement agreement can be included in more than one document, it is apparent that there was no such agreement. It based this conclusion on the testimony of both parties, lack of signature on the settlement agreement, and other communications between the parties at the negotiation stages in this case (such as letters between the attorneys that expressed displeasure with terms in the agreement). Therefore, the Court concluded that a settlement agreement did not actually exist and that it could not enforce a settlement agreement that does not actually exist.

Obtaining settlement agreements can be somewhat complicated because they involve getting both sides to agree to many different terms. However, they are very valuable because they allow the parties to avoid trial and get their conflicts resolved quickly. The Berniard Law Firm is always interested in solving our clients’ problems quickly and effectively.

Liberative Prescriptions: Purpose and Importance

Published on: October 1, 2012 | By Berniard Law Firm

In Louisiana, like many other states, there are certain restrictions on the period in which you may bring a lawsuit. There are several practical reasons for these restrictions. First, it is important to restrict the period so that people are not in constant fear of being sued for actions that happened years ago. For example, if you cause a car accident, it would be unreasonable to have to defend that issue 20 years after it happened. If we did not have some restrictions, you could be sued for any wrongdoing you’ve ever done over the course of your entire lifetime. Second, if the complaining party brings the suit quickly, then the court is more likely to deal with more accurate information. In our simple car accident example, one can assume that it would be easier to remember the details of a car accident that happened six months ago as opposed to one that happened 20 years ago. Lastly, time frame limits help create efficiency for the court and for those who are involved in the suit. Evidence is easier to obtain when the suit is brought quickly and that makes the trial much easier on all the parties involved.

Louisiana has a variety of codes that describe the time frame limitations for bringing suit. They are known as liberative prescription and the time frames vary by the type of injury involved. For example, the liberative prescription for car accidents is generally one year from the date of the accident in Louisiana. However, you can also file for an interruption, suspension, or renunciation of the liberative prescription. In order to comply with the liberative prescription, you only need to take action that will bring the suit forward; the suit does not need to conclude within this time frame.

One such liberative prescription case was addressed by the Fifth Circuit Court of Appeal for the State of Louisiana in Dec of 2011. In this case, the complaining party was injured as a result of a car accident on March 19, 2003. Shortly after the accident (October 30, 2003), the injured party filed suit. At this point, the injured party was well within the yearlong liberative prescription for the type of suit he was bringing.

However, the next step in the suit would be to notify the other party that they are being sued and call them into court so that the litigation process can commence. There are very stringent methods involved in this notification process that the courts have detailed extensively. Time and manner restrictions are particularly important. The law has set up these safe guards so that when people are sued they are afforded every right of due process as required by not only state laws, but also by the Constitution of the United States. Unfortunately, the injured party in this case either failed to follow those rules or did not make any effort of informing the other party that they were being sued. Therefore, after giving them over six years to comply, the court dismissed the original complaint on November 30, 2009 without prejudice.

The concept of prejudice was important for this case as well. When a court dismisses a case without prejudice, that means that the complaining party is welcome to try the suit again in the future. Dismissal without prejudice is common when there are simple procedural errors that can be easily corrected. However, if the court dismisses with prejudice, then the complaining party cannot bring a suit for the same incident against the same party in the future. Because this complaint was dismissed without prejudice, the complaining party might be able to sue again.

However, the major issue in this case was that even after the suit was dismissed without prejudice, the defendant argued that the plaintiff could not sue again because the liberative prescription period of one year had already run. The plaintiff, in opposition, argued that the liberative prescription was interrupted because they already filed suit once within the liberative prescription period.

Following the general notion that the complaining party need only start the lawsuit within the liberative prescription period, then the complaining party may have been able to file again. However, when a complaint is dismissed, the party is starting an entirely new lawsuit, so it is possible that the court would have denied the commencement of this new lawsuit because it falls well outside the liberative prescription period.

Unfortunately, in this case, the court was unable to weigh in on the issue because the complaining party presented no evidence in support of their argument. When the court does not have evidence to consider, then it cannot rule in favor of the party whose burden it is to convince them of the facts – the plaintiff in this case. In fact, the plaintiff’s counsel did not even show up for the hearing regarding the liberartive prescription issues in this case.

Liberative prescription issues vary from case to case and can be somewhat complicated. Contact the Berniard Law Firm if you have any legal needs as soon as possible after a potential legal situation arises so that you can avoid these complications.

Drilling Accident Shows Standards for Reasonable Care

Published on: September 7, 2012 | By Berniard Law Firm

A field service technician sued a crew boat operator and several entities related to the drilling operations when he was injured during a personnel basket transfer and a mobile drilling unit. The trial court, applying a “reasonable care” standard, granted summary judgment in favor of the drilling companies and the service technician, Callahan, appealed the decision.

Callahan, an employee of Cooper Cameron Corporation, was hired to help install, repair and replace equipment on the offshore oil well. While transferring the mobile drilling unit, the ship moved abruptly, causing Callahan’s back to pop and sharp pain to shoot through it. Callahan returned to his cabin and later executed a successful personnel basket transfer. Once he arrived on the barge, he reported his injury to the medic. Callahan argued various claims of negligence, revolving around the decision to transfer him to the barge in unreasonably dangerous conditions. However, according to the district court, since no employee of the crew boat directed Callahan to leave his cabin for transfer, these companies could not be held liable, particularly given Cooper Cameron Corporation’s “stop work” policy which gives employees the right to stop working if they find the conditions to be unsafe. Callahan clearly knew of this policy since he has used it before, but did not apply in these circumstances.

On appeal, Callahan claimed that the trial court made a mistake in finding that the conduct of the drilling companies (Diamond, Golf Logistics, Eagle Consulting, and LLOG) was reasonable and therefore in granting them summary judgment. Summary judgment is appropriate if “there is no genuine dispute as to any material fact”. FED. R. CIV. P. 56(a). A material fact is one that might affect the outcome of the case if it is found in favor of a particular party.

BP Refinery Sued for Negligence in Gas Release

Published on: September 1, 2012 | By Berniard Law Firm

Contractor company employees working at a British Petroleum (BP) refinery sued the oil company for negligence. Workers at the refinery reported a “weird” gas smell while they were employed at the factory. None of the gas monitors about the refinery sounded an alarm. About 100 employees went to the hospital but none showed any injury due to gas exposure.

The employees claim that the substance was carbon disulfide gas. The mask of one of the plaintiffs tested positive for traces of carbon disulfide gas but the lab technician who took charge of the mask noted that the mask had not been well maintained enough to be tested properly. When the district court found for the plaintiffs, BP appealed the verdict. BP argues that it was wrong for the trial judge to have instructed the jury on res ipsa loquitur and that without that instruction, the plaintiffs could not have shown that the company to be negligent.

Res ipsa loquitur is a doctrine used in certain types of cases when the circumstances surrounding the accident constitute sufficient evidence of the defendant’s negligence to support such a finding. Basically translated, the doctrine concludes that if an accident could not have come about by any other method than the one claimed, then the fact that the event happened is proof enough that it happened in the manner claimed; in other words, “the thing speaks for itself”. Res ipsa loquitur is applicable only when: (1) the character of the accident is such that it would not ordinarily occur in the absence of negligence; and (2) the cause of the injury is shown to have been under the management and control of the defendant. Using res ipsa loquitur, negligence can be inferred by the jury without evidence of wrongdoing.

Summary Judgment Summarily Dismissed by Third Circuit in Vehicle Accident Case

Published on: April 23, 2012 | By Berniard Law Firm

A summary judgment is rendered when a trial court decides that there are no genuine issues of material fact that need to be determined. “Manifestly erroneous” is the high standard under which summary judgments are reversed on appeal. Summary judgments are cheaper and less time consuming than full blown trials; they are a means toward the end of judicial expediency, a goal that becomes increasingly important to our judicial system over time. Despite the importance of this procedural device, many cases do not call for summary judgment. Sometimes trial courts grant full or partial summary judgments in error and are reversed. That is what occurred in the case of Jagneux v. Frohn, which you can read here.

The defendants in this case convinced the trial court that no issues of fact existed that required litigating. Their legal journey was not over though due to the plaintiff’s appeal. The court of appeals applied the standard promulgated by the Louisiana Supreme Court. This Louisiana Supreme Court’s standard initially places the burden of proof on the party that is moving for a summary judgment. The moving party must prove that one or more elements of the adverse party’s claim or defense lacks any factual support on the record so far. The opposing party is then granted an opportunity to prove that there have been facts alleged that support that party’s position. At the time of summary judgment the record is sparse so a granting of summary judgment represents a finding by the court that no facts supporting a particular party’s, in this case the plaintiff’s, position.

The appellate court reversed the trial court’s decision in this case because it found that the issue of whether Mrs. Kling, a defendant in this case, was the driver of the white SUV at the time that it, at least partially, caused the accident at issue in this case. Because there was conflicting evidence about where Mrs. Kling was and whether or not she was actually in control of the car at the time of the accident, summary judgment was not the right choice in this case. The trial court is not to weigh the merits of the case when addressing summary judgment. Summary judgment is only appropriate in cases where no potentially meritorious case is presented by one of the parties.

Happy Holidays from the Berniard Law Firm

Published on: April 8, 2012 | By Berniard Law Firm

On behalf of the Berniard Law Firm, we hope that all of our friends and followers have had a relaxing and restful holiday. Posting will resume on Tuesday

A Happy Holidays to All Friends of the Berniard Law Firm

Published on: December 25, 2011 | By Berniard Law Firm

The Berniard Law Firm would like to wish everyone a Happy Holiday.

Regular posting will resume in 2012! Have a happy, and SAFE, holiday season!

Nuances of Insurance Policies Crucial When Pursuing Coverage

Published on: September 27, 2011 | By Berniard Law Firm

When litigation involves multiple parties, all of which are big national or international organizations, there is a higher likelihood that something is going to end up in the litigation process. The unfortunate nature of insurance coverage is that companies will try to find little nuances to try to argue their case, or will add little nuances to make any future case more difficult for opposing parties. One party to a contractual agreement may cite to these nuances to find a loophole to escape from any potential liability and, subsequently, leave someone who believed they had full coverage with nothing. Despite these loophole efforts, a court can still look at the realities of the circumstances and come to real life conclusions to the exclusion of the argument of either party. This is true in the case of Federal Insurance Company v. New Hampshire Insurance Company, when the court ultimately looked at the reality of a contractual agreement and decided that no matter what the terms of the contract were, the whole contract was in regard to a personal injury case.

Our previous blog post discussed this case but a brief summary is as follows:
The case began when Wayne Robinson was unfortunately hurt by an explosion at a chemical plant. The explosion occurred because there were certain chemicals used by the plant that reacted with each other to cause the explosion. One of the defendants in Mr. Robinson’s case was Thomas and Betts Corporation (hereinafter T&B). T&B allegedly manufactured a product that contributed to the explosion that caused Mr. Robinson’s injuries. T&B had liability insurance from both New Hampshire Insurance Co., which was the primary insurance provider, and Federal Insurance Co., which was the secondary, or excess insurance provider. Ultimately, Mr. Robinson settled with T&B.

The interest of discussing policy nuances hinges upon the terms of the agreement were between T&B and Mr. Robinson. In that agreement, T&B would give Mr. Robinson $5 million for bodily injuries and an additional $1.2 million for a potential breach of contract claim another plaintiff may have had against Mr. Robinson. In fact, by settling with T&B, Mr. Robinson was breaching his agreement with the plaintiff company. After Mr. Robinson reached his agreement with T&B the other plaintiff sued Mr. Robinson for breach of contract. This breach of contract was supposed to be covered by his settlement agreement with T&B. However, soon after the settlement, Mr. Robinson received a letter from New Hampshire Co., T&B’s primary insurer, that it was going to cover his $5 million settlement, but would not cover his $1.2 million settlement because it was for a breach of contract and therefore, outside the scope of its policy covering T&B.

As a separate issue, the court discussed whether the New Hampshire policy covered contractual agreements. However, it came to the conclusion that the use of the phrase “legally obligated to pay” rendered the policy to cover tortious actions. However, the court went on to explain that the entire settlement between T&B and Mr. Robinson did in fact relate to and cover the bodily injury claim. The settlement could only cover the bodily injury claim because the only action for which T&B was liable to Mr. Robinson was the bodily injury. Therefore, the settlement could not be for any breach of contract claim.

The $1.2 million settlement was a by-product of T&B inducing Mr. Robinson to settle his bodily injury claim against T&B. The court held that even though this separate amount is categorized as reimbursement for a breach of contract claim, it is still within the bodily injury claim because the settlement was made in consideration for the bodily injury claim. Therefore, because the bodily injury claim was covered by the New Hampshire policy, New Hampshire was liable for the entire settlement. Mr. Robinson received money from Federal, T&B’s secondary insurer, therefore Federal stepped into T&B’s shoes in its claim for reimbursement from New Hampshire. Therefore, New Hampshire owed Federal the money it paid to Mr. Robinson.

Even in cases where a contract defines things in a certain manner or when the law defines different terms, the realities of a contract are the ultimate facts that define a contract. Although, the New Hampshire policy only covered tortious actions and even though the settlement between Mr. Robinson and T&B defined two different amounts, one for bodily injury and the other for a breach of contract, the reality was that both amounts were in consideration for the bodily injury claim and therefore the reality was that New Hampshire owed the entire amount as per its policy with T&B.

The Importance of Defining Terms in a Contract

Published on: September 23, 2011 | By Berniard Law Firm

The terms in a contractual agreement between parties can have the effect of changing entire meanings of contracts. This is especially true in more complex litigation and more complex business agreements. If a business agreement requires the participation of multiple partners or parties, an ambiguously defined contract can have the effect of increasing the amount of litigation which will occur every time there is a legal dispute between any or all of the parties. The clear practical effect of writing clear-cut and well defined contracts is that, in the long run, there will be less of a chance that any dispute will require a long, drawn-out litigation process which has the effect of draining the wallets of all the parties involved.

This is most important where one or more of the parties is a single individual with limited resources, and in some situations, is represented by smaller firms that have much less financial resources compared to bigger business entities with more resources and financing at their disposal. As a legal practice, any person that becomes part of a contractual agreement should clearly define any type of ambiguous terminology in an effort to save the agreement from getting the definitional application of common law or practice. Never is this more necessary than when an individual is pushed up against an insurance agency that holds their financial future in their hands. The importance of defining a contract can be clearly seen in the case of Federal Insurance Company v. New Hampshire Insurance Co.

Both Federal and New Hampshire insurance companies became involved in litigation because they both insured Thomas and Betts Corporation (hereinafter T&B). T&B made a product which contributed to an explosion at an aluminum processing plant in Gramercy, Louisiana, leaving employee Wayne Robinson with injuries. Ultimately, Mr. Robinson sued T&B, which had liability insurance from both Federal and New Hampshire. Thus, when the suit began, Federal and New Hampshire’s policies kicked into effect. New Hampshire was the “first insurer” for T&B. Federal, on the other hand, was T&B’s second layer excess insurer. On the eve of the trial, Mr. Robinson came to an agreement with T&B which had the effect of potentially extinguishing the law suit. T&B was going to pay Mr. Robinson $5 million dollars in damages for his unfortunate bodily injuries, and an additional $1.2 million in consideration for a potential breach of contract claim by another plaintiff company against Mr. Robinson. Subsequent to this settlement, New Hampshire notified Mr. Robinson that it was going to pay him the $5 million, but that it would not pay him the $1.2 million promised by T&B. When Mr. Robinson then received a letter from the plaintiff company, he sent the notice to Federal to show the demand made of him. Federal ended up giving Mr. Robinson $990,000 for the potential breach of contract claim against Mr. Robinson. The pertinent part of the agreement between T&B and Mr. Robinson is as follows:

“Thomas and Betts and Its Insurers agree to hold harmless, indemnify and defend Wayne Robins, et al, The Fields law Firm and Cleo Fields for any amount owed to AXA, Kaisers Subrogated Property Reinsurers, Caleb Didriksen and the Didriksen Law Firm, not to exceed 1.2 million dollars.”

Eventually, Federal sought the $990,000 from New Hampshire arguing that the amount should have been given to Mr. Robinson as part of T&B’s policy with New Hampshire. New Hampshire argued that this amount was not within T&B’s policy with it. The pertinent part of T&B’s policy with New Hampshire was that New Hampshire, “becomes legally obligated to pay by reason of liability imposed by law or assumed by [T&B] under an Insured Contract because of Bodily Injury.” This seems simple enough, however there was no definition of “legally obligated to pay.” In the world of contracts, the contracting parties have the ability to define things in any manner they see fit. These definitions should, however, be included in the contract itself in the index of terms. When a contract does not define any of the material terms, the terms should be filled in by the court. In this case, the court decided that since the phrase was not defined, it should be filled in with what was commonly used in Louisiana. It Louisiana, it was well settled that the use of the phrase was for damages arising out of tortious actions and not from a contractual obligation. Therefore, on the face of the assertion, Federal would be out of luck because it sought money from New Hampshire for money it gave Mr. Robinson due to a breach of contract. Even though the court sided with Federal for other reasons, Federal would have been dealt a strict blow because it did not read the policy between T&B and New Hampshire clearly enough to see that the term was not defined.

Therefore, before taking any action any party should clearly read any existing agreement between relevant parties and should make sure any contract it signs has clearly defined terms that will not lead to unnecessary litigation which will only serve to drain resources.

Insurance Coverage and its Limits – How Protected Are You?

Published on: September 10, 2011 | By Berniard Law Firm

U.S. Court of Appeals affirms that maritime insurance policy covering collision on the Mississippi River included defense costs in coverage limits. In a case of insurance contract interpretation, the U.S. Court of Appeals for the Fifth Circuit determined that defense costs were included in the policy limits set by a maritime insurance policy. The court admitted that this interpretation erodes policy limits.

Gabarick v. Laurin Maritime (America) Inc., Nos. 09-30549, 09-30809 (5th Cir. 8/10/11) arose out of a collision on the Mississippi River. Laurin Maritime and related parties owned the ocean-going tanker M/V Tintomara. In the early hours of July 23, 2008, the ship collided with a barge carrying heavy fuel oil. The impact split the barge in half, and heavy oil spilled into the river. American Commercial Lines, LLC (barge owner) owned the tug, barge, and cargo, but D.R.D. Towing Co., LLC (towing company) provided the crew that ran the tug pushing the barge. It’s the towing company’s insurance policy that raised issues of policy interpretation.

A protection and indemnity (or P&I) policy issued by Indemnity Insurance Company of North America (insurer) covered the towing company. The policy is a standard maritime policy, except for modifications the parties made to the SP-23 Form. The policy provided a single occurrence limit of liability of $1 million, with a $15,000 deductible. The towing company and the barge owner demanded that the insurer indemnify and defend them. Not knowing which of the numerous parties rightfully should receive the insurance proceeds, the insurer deposited $985,000 into the registry of the U.S. District Court for the Eastern District of Louisiana for the court to make the decision. That court held that the insurer’s deposit for the interpleader action was proper and that the funds would reimburse defense costs. The barge owner and Laurin Maritime appealed.

The appellate court explained that Louisiana law forms the basis for the court’s independent review of the District Court’s interpretation of the insurance policy. Even before it entered into this analysis, the court cautioned that marine insurance commentators agree that defense costs are typically included within such insurance policy limits. The P&I insurer usually has no duty to defend: indemnification is the basis for coverage. Louisiana law agrees. Legal expenses incurred in defending a liability covered by an insurance policy are treated as part of the overall claim. Payment of legal expenses falls within the policy limits. Because the barge owner is a sophisticated commercial entity, it bore the burden that this policy should be interpreted differently.

The collision triggered coverage under the policy’s collision and towers liability and protection and indemnity coverage. Although the policy was mostly standard, a “manuscript provision” (modification) added a collision and towers liability clause. The standard language for the relevant coverage stated, “Liability hereunder in respect to any one accident or occurrence is limited to the amount hereby insured.” The court found no ambiguity.

The barge owner argued that the policy was ambiguous. It pointed to the modification language that the insurer “will also pay the costs which the Insured shall thereby incur or be compelled to pay.” The barge owner argued that Exxon Corporation v. St. Paul Fire & Marine Insurance Co., 129 F.3d 781 (5th Cir. 1997) had interpreted the clause to exclude defense costs from the policy cap. This argument did not work for three reasons. The cited case involved personal injury, not collision, placing the “also pay” language in the P&I policy, unlike the towing company’s policy. Second, the claims mentioned by the barge owner are excluded from the collision coverage. “[A]ny recovery must come under the standard P&I section of the policy,” the court explained. Finally, any ambiguity from the clause, were it applicable, would not extend to the relevant coverage sections of the standard policy language because the modification was a separate contract entered into by sophisticated parties.

The court summarized that “the policy is clear that defense costs were intended to be included within the policy limits. This P&I policy is unambiguously written against the backdrop of traditional principles of maritime law that defense costs erode P&I limits of liability.”

The barge owner also appealed the District Court’s denial of insurance proceeds. The appellate court explained, “The district court did not permanently deny funds to the barge owner but rather stated, ‘payment to [the barge owner] at this time would not be equitable.'” (Alterations in original.) Therefore, the District Court’s decision was not a final judgment and could not be appealed.

Coverage limits and defense from an insurer are crucial issues in evaluating a claim when you have been harmed. Insurance policies differ between consumer and business and by industry. This case demonstrates the specificity of insurance coverage. A lawyer independent of your insurance company can help you understand your policy, its coverage limits, and the extent of an insurer’s duty to defend.