Subsidiary of contracting party was required to be named as an additional insured because of interchangeable references to the contracting party and its subsidiaries in the master service agreement; Mays v. C-Dive, L.L.C., No. 19-30106 (5th Cir. Feb. 5, 2020) (Costa)

Uncategorized

Four divers employed by C-Dive in the decommissioning of a pipeline in the Gulf of Mexico, offshore Louisiana, were injured in an explosion and brought this suit against C-Dive and the owner of the pipeline, Gulf South Pipeline Company. Gulf South is a subsidiary of Boardwalk Pipelines, LP, which entered into a master service agreement with C-Dive. Gulf South sought additional insured coverage on C-Dive’s insurance policies in accordance with the provision of the master service agreement that stated: “All [of C-Dive’s insurance] policies . . . shall be endorsed to include Boardwalk Pipelines, LP as an additional insured and these policies will respond as primary to any other insurance available to Boardwalk.” The agreement also stated that “[r]eference to Boardwalk shall also include its subsidiaries and . . . affiliates of Boardwalk, including . . . Gulf South.” Judge Milazzo previously concluded that the master service agreement was maritime, so there was no problem with the anti-indemnity and anti-insurance provisions of the Louisiana Oilfield Indemnity Act. She then held that Gulf South was an additional insured on C-Dive’s liability policies, which led to this appeal. The insurers argued that the specific reference in the additional insured provision to Boardwalk Pipelines, LP, compared to the use of Boardwalk (which included subsidiaries) elsewhere in the agreement, reflected a specific intent to differentiate these parties such that only Boardwalk Pipelines, LP, and not its subsidiary Gulf South, was afforded additional insured coverage. Writing for the Fifth Circuit, Judge Costa concluded that the reference to Boardwalk Pipelines, LP in the additional insured provision encompassed Gulf South. He noted that the agreement used Boardwalk Pipelines, LP and Boardwalk interchangeably throughout the document. That was demonstrated by the provision that Boardwalk Pipelines was referred to as Boardwalk but then stating that reference to Boardwalk would include its subsidiaries, including Gulf South. Thus, when the additional insured provision named Boardwalk Pipelines, LP, it referred to Boardwalk, which referred to Gulf South. Even the additional insured provision used the terms interchangeably when it provided for the naming of Boardwalk Pipelines, LP and then provided that the policies would be primary to any other insurance available to Boardwalk. Judge Costa reasoned that it would make no sense to require the policies to name only the parent company when the policies were primary to the coverage of the subsidiaries. Judge Costa therefore held that Judge Milazzo correctly held that C-Dive’s insurance policies unambiguously included Gulf South as an additional insured.