Key Points

  • Texas choice-of-law provision governed the master services contract.
  • Louisiana’s anti-indemnity statute did not apply to claims without death or bodily injury.
  • Punitive and exemplary damages are excluded from the indemnity obligation.
  • Underlying-suit fees must be pursued as contract damages, not Rule 54 fees.

The Fifth Circuit largely affirmed summary judgment for Anadarko in its contract dispute with Alternative Env Solutions over defense and indemnity obligations tied to Louisiana litigation alleging an overbilling scheme involving environmental-remediation work. The panel held that the parties’ master services contract called for Texas law and that the Louisiana Oilfield Anti-Indemnity Act did not displace that choice.

The contract, executed in 2008, provided that it would be governed by general maritime law or Texas law and required litigation connected with the agreement to proceed in Harris County, Texas. It also required Alternative Env Solutions to defend, release, indemnify and hold Anadarko harmless from claims connected to the contractor’s violations of applicable laws. Alternative Env Solutions argued that Louisiana law should govern and invalidate the indemnity provision.

The panel found that Texas had the more significant relationship to the dispute. Although Alternative Env Solutions had performed work in Louisiana, the alleged fraud concerned a Wyoming project, and meetings about that project occurred in Wyoming and Texas. Louisiana also lacked a materially greater interest, the court concluded. The anti-indemnity statute did not apply because the contract provision and underlying claims did not concern death or bodily injury. “So, LOIA would not bar this provision and it follows that applying Texas law is not contrary to a fundamental public policy of Louisiana.”

The court also rejected the argument that the indemnity provision was void as an agreement for an illegal purpose based on allegations involving an Anadarko employee. Anadarko sought indemnity for Alternative Env Solutions’ violations, the panel said, and those claims fell within the contract’s language. The court further held that Anadarko was not judicially estopped from bringing a separate federal action to enforce the defense and indemnity duties.

But the panel vacated the portion of the declaratory judgment that could make Alternative Env Solutions responsible for punitive or exemplary damages, which the contract expressly excludes. It also vacated the award of fees Anadarko incurred in the underlying Louisiana case because those fees are actual damages in a breach-of-contract claim, rather than fees awardable under Rule 54. Fees for the federal declaratory action were affirmed, and the case was remanded for further proceedings.