Will Louisiana enforce this indemnity clause if the work relates to an oil, gas, or water well, or is a construction or motor-carrier contract?
No, to the extent the clause would indemnify the indemnitee against its own negligence or fault (for DEATH OR BODILY INJURY under the oilfield statute, and for any "loss or damage" under the construction and motor-carrier statute) in two separately codified anti-indemnity statutes. For a well or drilling agreement, the Louisiana Oilfield Anti-Indemnity Act, La. R.S. 9:2780(B): "Any provision contained in, collateral to, or affecting an agreement pertaining to a well ... is void and unenforceable to the extent that it purports to or does provide for defense or indemnity ... to the indemnitee against loss or liability for damages arising out of or resulting from death or bodily injury to persons, which is caused by or results from the sole or concurrent negligence or fault (strict liability) of the indemnitee, or an agent, employee, or an independent contractor who is directly responsible to the indemnitee." A Louisiana Court of Appeal confirmed how litigants invoke the statute in Rogers v. Integrated Exploration & Prod., LLC: "LOAIA is found in La. R.S. 9:2780 and provides, in pertinent part, that certain defense and indemnification agreements 'pertaining to a well' are unenforceable," applying a "two-step test" to determine whether a given agreement is one the statute reaches. A separate, broader statute covers construction and motor-carrier transportation contracts outside the oilfield context, and it says on its face that it is not absolute: R.S. 9:2780.1(B) operates "Notwithstanding any provision of law to the contrary and except as otherwise provided in this Section", and voids a construction or motor-carrier-transportation-contract provision that "purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the indemnitee from or against any liability for loss or damage resulting from the negligence or intentional acts or omissions of the indemnitee, an agent or employee of the indemnitee, or a third party over which the indemnitor has no control." Subsection (C) voids a second clause type the question above does not name: a provision "which purports to require an indemnitor to procure liability insurance covering the acts or omissions or both of the indemnitee, its employees or agents, or the acts or omissions of a third party over whom the indemnitor has no control is null, void, and unenforceable", and its own second sentence is the saving clause, that "nothing in this Section shall be construed to prevent the indemnitee from requiring the indemnitor to provide proof of insurance for obligations covered by the contract." Subsection (D) fixes the reach: the section governs "any construction contract to be performed in this state and any motor carrier transportation contract relative to loading or unloading activities, or any services incidental thereto, which occur in this state".
The trap
Rogers' own "two-step test" is the trap: whether an agreement is one "pertaining to a well" under § 9:2780 is a real, litigated threshold question, not a label the parties can avoid simply by drafting a general master service agreement that does not mention a specific well by name: the statute itself reaches blanket contracts (§ 9:2780(J): "This specifically includes what is commonly referred to in the oil industry as master or general service agreements or blanket contracts in whatever form and by whatever name"), and the test is applied to the work, not the label. It cuts both ways: in Rogers the master contract did NOT pertain to a well, because the work was on a commingling platform where, in the Fifth Circuit's words the court adopted, the gas "can no longer be identified with a particular well," and the indemnity was enforced; the court affirmed all three judgments on appeal. Section 9:2780(D)(2) is a further trap running the other way: the void rule does NOT reach an "operating agreement" or a "farmout agreement". The two are not the same shape, and only the first is between co-owners: an operating agreement is one "entered into by or among the owners of mineral rights for the joint exploration, development, operation, or production of minerals", while a farmout agreement is one in which the holder of the operating rights agrees to assign "all or a portion of a mineral lease or of the operating rights" to an assignee. The carve-out "shall not extend to any party who physically performs any activities" under the agreement, so the same document can be enforceable indemnity as between the parties the definition covers and simultaneously void as applied to a party who does physical field work under it. Subsection (D)(1) adds that the section does not affect "the validity of any insurance contract" or "any benefit conferred by the workers' compensation laws of this state", and does not deprive a surface owner or usufructuary of an indemnity from a mineral operator. Three whole industries and three whole kinds of loss sit outside § 9:2780 as well. Subsection (E): the section "shall have no application to public utilities, the forestry industry, or the sulphur industry, so long as the work being performed is not any of the operations, services, or activities listed in Subsection C above, except to the extent those operations, services, or activities are utilized in the sulphur industry." Subsection (F) takes out bodily injury or death "arising out of or resulting from radioactivity", from the retainment of oil spills and clean-up after a wild well or a pipeline failure, and from "performance of services to control a wild well so as to protect the safety of the general public or to prevent depletion of vital natural resources." A clause the section would otherwise void can therefore stand for exactly the loss in dispute. Both statutes also carry cut-off dates. The same § 9:2780(J) that reaches blanket contracts provides that the Act "shall not apply to a contract providing indemnity to the indemnitee when such contract was executed before the effective date of this Act and which contract governs a specific terminable performance of a specific job or activity listed in Subsection C of this Section", and § 9:2780.1(F) is blunter still: it "shall not apply to prohibited clauses in any motor carrier transportation contract and any construction contract entered into prior to January 1, 2011." For construction and motor-carrier contracts, § 9:2780.1(I) preserves a narrow route around the void rule that § 9:2780 does not offer in the same way: a construction-contract indemnity clause remains enforceable if the contract ALSO requires the indemnitor to obtain insurance covering the indemnity obligation and there is evidence the indemnitor recovered the insurance cost in the contract price, but even then, "the indemnitor’s liability under such clause shall be limited to the amount of the proceeds that were payable under the insurance policy." A second clause survives alongside it: § 9:2780.1(I)(2) preserves a requirement that the indemnitor procure insurance or name the indemnitee as an additional insured, "but only to the extent that such additional insurance coverage provides coverage for liability due to an obligation to indemnify, defend, or hold harmless authorized pursuant to Paragraph (1) of this Subsection", and only "when the indemnitor is at least partially at fault or otherwise liable for damages ex delicto or quasi ex delicto." And § 9:2780.1(E) expressly says the newer statute does not alter, add to, or overlap R.S. 9:2780: the two anti-indemnity statutes are read side by side, not as one merged into the other, for a contract that could plausibly fall under either (for example, well-site construction work). Louisiana does not stop at the indemnity clause, and this rule used to. § 9:2780's own heading is ‘Certain indemnification agreements invalid; additional insured coverage’, and Subsection G voids the usual way round it: a provision requiring waivers of subrogation, additional named insured endorsements ‘or any other form of insurance protection which would frustrate or circumvent the prohibitions of this Section’ is ‘null and void and of no force and effect’. Subsection H then reopens a single narrow door, notwithstanding G: additional insured coverage procured as the result of an agreement is ‘enforceable solely as follows’, and the party seeking it must do all three of requesting an additional-insured premium quote by SEPARATE written communication to the named insured or its agent or broker, receiving a premium quote from the named insured's insurer or authorised representative, and making DIRECT PAYMENT to that insurer or representative. Miss any of the three and the coverage is not enforceable under this Subsection. On the construction and motor-carrier side § 9:2780.1 leaves one thing expressly intact: nothing in it prevents the indemnitee from requiring the indemnitor to provide proof of insurance for obligations covered by the contract. And whatever the contract does between the companies, the worker's own claim is untouched: “Nothing in this Section shall prohibit any employee from recovering damages, compensation, or benefits under workers' compensation laws or any other claim or cause of action.”
18 authorities
- statuteLa. R.S. 9:2780enactment date not established
The words that state the rule
Any provision contained in, collateral to, or affecting an agreement pertaining to a well or wells for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, is void and unenforceable to the extent that it purports to or does provide for defense or indemnity, or either, to the indemnitee against loss or liability for damages arising out of or resulting from death or bodily injury to persons, which is caused by or results from the sole or concurrent negligence or fault (strict liability) of the indemnitee, or an agent, employee, or an independent contractor who is directly responsible to the indemnitee.
- statuteLa. R.S. 9:2780.1enactment date not established
The words that state the rule
B. Notwithstanding any provision of law to the contrary and except as otherwise provided in this Section, any provision, clause, covenant, or agreement contained in, collateral to, or affecting a motor carrier transportation contract or construction contract which purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the indemnitee from or against any liability for loss or damage resulting from the negligence or intentional acts or omissions of the indemnitee, an agent or employee of the indemnitee, or a third party over which the indemnitor has no control is contrary to the public policy of this state and is null, void, and unenforceable.
- case265 So.3d 880Rogers v. Integrated Exploration & Prod., LLCLa. Ct. App.decided 2019read it at the source ↗
The words that state the rule
LOAIA is found in La. R.S. 9:2780 and provides, in pertinent part, that certain defense and indemnification agreements "pertaining to a well" are unenforceable:
- statuteLa. R.S. 9:2780enactment date not established
The words that state the rule
J. This Act shall apply to certain provisions contained in, collateral to or affecting agreements in connection with the illustrative activities listed in Subsection C of this Section which are designed to provide indemnity to the indemnitee for all work performed between the indemnitor and the indemnitee in the future. This specifically includes what is commonly referred to in the oil industry as master or general service agreements or blanket contracts in whatever form and by whatever name. The provisions of this Act shall not apply to a contract providing indemnity to the indemnitee when such contract was executed before the effective date of this Act and which contract governs a specific terminable performance of a specific job or activity listed in Subsection C of this Section.
- case265 So.3d 880Rogers v. Integrated Exploration & Prod., LLCLa. Ct. App.decided 2019read it at the source ↗
The words that state the rule
As the U.S. Fifth Circuit explained in Lloyd's , LOAIA does not apply where work is performed at a "reasonably determinable point" at which the gas can no longer be identified with a particular well, or is so fundamentally changed in commingling *889 or preparing it for distribution that the gas no longer pertains to a well.
- case265 So.3d 880Rogers v. Integrated Exploration & Prod., LLCLa. Ct. App.decided 2019read it at the source ↗
The words that state the rule
Accordingly, we find no error in the district court's conclusion that LOAIA does not apply to the facts of this case.
- statuteLa. R.S. 9:2780enactment date not established
The words that state the rule
G. Any provision in any agreement arising out of the operations, services, or activities listed in Subsection C of this Section which requires waivers of subrogation, additional named insured endorsements, or any other form of insurance protection which would frustrate or circumvent the prohibitions of this Section, shall be null and void and of no force and effect.
- statuteLa. R.S. 9:2780enactment date not established
The words that state the rule
H. Notwithstanding the prohibitions of Subsection G of this Section, additional insured coverage if procured as the result of an agreement shall be enforceable solely as follows: (1) A party can seek additional insured coverage for itself or itself and members of its group as defined by its agreement with the named insured after the party seeking additional insured coverage does all of the following: (a) Makes such a request for an additional insured premium quote by separate written communication to the named insured or the named insured's insurance agent or broker, or both. (b) Receives a premium quote from the named insured's insurer or its authorized representative. (c) Makes direct payment to the named insured's insurer or its authorized representative for either additional insured coverage for itself only or for itself and members of its group as defined by its agreement with the named insured.
- statuteLa. R.S. 9:2780.1enactment date not established
The words that state the rule
C. Notwithstanding any provision of law to the contrary and except as otherwise provided in this Section, any provision, clause, covenant, or agreement contained in, collateral to, or affecting a motor carrier transportation contract or construction contract which purports to require an indemnitor to procure liability insurance covering the acts or omissions or both of the indemnitee, its employees or agents, or the acts or omissions of a third party over whom the indemnitor has no control is null, void, and unenforceable. However, nothing in this Section shall be construed to prevent the indemnitee from requiring the indemnitor to provide proof of insurance for obligations covered by the contract.
- statuteLa. R.S. 9:2780.1enactment date not established
The words that state the rule
Nothing in this Section shall prohibit any employee from recovering damages, compensation, or benefits under workers' compensation laws or any other claim or cause of action.
- statuteLa. R.S. 9:2780enactment date not established
The words that state the rule
Certain indemnification agreements invalid; additional insured coverage A. The legislature finds that an inequity is foisted on certain contractors and their employees by the defense or indemnity provisions, either or both, contained in some agreements pertaining to wells for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, to the extent those provisions apply to death or bodily injury to persons.
- statuteLa. R.S. 9:2780enactment date not established
The words that state the rule
D.(1) The provisions of this Section do not affect the validity of any insurance contract, except as otherwise provided in this Section, or any benefit conferred by the workers' compensation laws of this state, and do not deprive a full owner or usufructuary of a surface estate of the right to secure an indemnity from any lessee, operator, contractor, or other person conducting operations for the exploration or production of minerals on the owner's land. (2) Any language in this Section to the contrary notwithstanding, nothing in this Section shall affect the validity of an operating agreement or farmout agreement, as defined herein, to the extent that the operating agreement or farmout agreement purports to provide for defense or indemnity as defined in Subsection B of this Section. This exception shall not extend to any party who physically performs any activities pursuant to any agreement as defined in Subsection C of this Section. For purposes of this Subsection, operating agreement and farmout agreement shall be defined as follows: (a) "Operating agreement" means any agreement entered into by or among the owners of mineral rights for the joint exploration, development, operation, or production of minerals. (b) "Farmout agreement" means any agreement in which the holder of the operating rights to explore for and produce minerals, the "assignor", agrees that it will, upon completion of the conditions of the agreement, assign to another, the "assignee", all or a portion of a mineral lease or of the operating rights.
- statuteLa. R.S. 9:2780.1enactment date not established
The words that state the rule
D. Notwithstanding any contractual provision to the contrary, this Section shall apply to and govern any construction contract to be performed in this state and any motor carrier transportation contract relative to loading or unloading activities, or any services incidental thereto, which occur in this state. Any provision, covenant, or clause in such contracts which conflicts with the provisions of this Section shall be null, void, and unenforceable. E. The provisions of this Section are not intended to, nor shall they be judicially interpreted, to alter, add to, subtract from, amend, overlap, or affect the provisions of R.S. 9:2780 or R.S. 38:2195.
- statuteLa. R.S. 9:2780.1enactment date not established
The words that state the rule
Nothing in this Section shall invalidate or prohibit the enforcement of the following: (1) Any clause in a construction contract containing the indemnitor's promise to indemnify, defend, or hold harmless the indemnitee or an agent or employee of the indemnitee if the contract also requires the indemnitor to obtain insurance to insure the obligation to indemnify, defend, or hold harmless and there is evidence that the indemnitor recovered the cost of the required insurance in the contract price. However, the indemnitor's liability under such clause shall be limited to the amount of the proceeds that were payable under the insurance policy or policies that the indemnitor was required to obtain. (2) Any clause in a construction contract that requires the indemnitor to procure insurance or name the indemnitee as an additional insured on the indemnitor's policy of insurance, but only to the extent that such additional insurance coverage provides coverage for liability due to an obligation to indemnify, defend, or hold harmless authorized pursuant to Paragraph (1) of this Subsection, provided that such insurance coverage is provided only when the indemnitor is at least partially at fault or otherwise liable for damages ex delicto or quasi ex delicto.
- case265 So.3d 880Rogers v. Integrated Exploration & Prod., LLCLa. Ct. App.decided 2019read it at the source ↗
The words that state the rule
To determine whether LOAIA is applicable, "courts have engaged in a two-step test." Fontenot v. Chevron U.S.A. Inc. , 95-1425, p. 10 (La. 7/2/96), 676 So.2d 557 , 564 (citing Transcontinental Gas v. Transportation Ins. Co. , 953 F.2d 985 , 991 (5th Cir.1992) (" Transco ") ). 6 "First, there must be an agreement that 'pertains to' an oil, gas or water well." Id. "Second, the agreement must be related to exploration, development, production, or transportation of oil, gas, or water." Id. "If the contract does not pertain to a well, the inquiry ends.
- statuteLa. R.S. 9:2780enactment date not established
The words that state the rule
E. This Section shall have no application to public utilities, the forestry industry, or the sulphur industry, so long as the work being performed is not any of the operations, services, or activities listed in Subsection C above, except to the extent those operations, services, or activities are utilized in the sulphur industry. F. The provisions of this Section do not apply to loss or liability for damages, or any other expenses, arising out of or resulting from: (1) Bodily injury or death to persons arising out of or resulting from radioactivity; or (2) Bodily injury or death to persons arising out of or resulting from the retainment of oil spills and clean-up and removal of structural waste subsequent to a wild well, failure of incidental piping or valves and separators between the well head and the pipelines or failure of pipelines, so as to protect the safety of the general public and the environment; or (3) Bodily injury or death arising out of or resulting from performance of services to control a wild well so as to protect the safety of the general public or to prevent depletion of vital natural resources. The term "wild well," as used in this Section, means any well from which the escape of salt water, oil, or gas is unintended and cannot be controlled by the equipment used in normal drilling practices.
- statuteLa. R.S. 9:2780.1enactment date not established
The words that state the rule
F. The provisions of this Section shall not apply to prohibited clauses in any motor carrier transportation contract and any construction contract entered into prior to January 1, 2011.
- case265 So.3d 880Rogers v. Integrated Exploration & Prod., LLCLa. Ct. App.decided 2019read it at the source ↗
The words that state the rule
Accordingly, for the reasons ascribed above, we affirm the three judgments on appeal, dated December 7, 2016, June 16, 2017, and December 19, 2017.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.