Case: Chatelain v. Fluor Daniel Constr. Co.
Louisiana Fourth Circuit Court of Appeal
Case No. 2014-CA-1312, (La. App. 4 Cir. 11/10/15), 2015 La. App. LEXIS 2257

In Chatelain v. Fluor Daniel Constr. Co., Plaintiff was injured when she fell exiting her FEMA trailer and sued the contractor, Fluor, and its subcontractor, Reavis, alleging construction defects. In a Blanket Ordering Agreement ("BOA") between Fluor and Reavis for the delivery and installation of FEMA trailers, Reavis agreed to defend and indemnify Fluor for "injury to or death of persons . . . arising directly or indirectly out of the acts or omissions to act of [Reavis] . . . in the performance of the Work, but excepting where the injury or death of persons . . . was caused by the sole negligence or willful misconduct of the party to be indemnified." In reversing the trial court's summary dismissal of Fluor's claims against Reavis, the Fourth Circuit reasoned the trial court's interpretation of the defense and indemnity obligations improperly imposed a temporal requirement which ignored the contract language and conflicted with controlling Louisiana Supreme Court interpreting such "arising out of" language as imposing a causation, as opposed to a temporal, requirement.

The Court noted the Louisiana Supreme Court has interpreted the phrases "arising out of the performance of a contract" or "arising out of performance of the work" in contractual indemnification provisions as limiting the indemnity obligation to those acts and omissions having a minimal causal connection to contract performance. A requirement in an indemnity agreement that the claim arise out of the contractor's performance of the contract thus has been interpreted to mean "a connexity similar to that required for determining cause-in-fact: Would the particular injury have occurred but for the performance of the work under the contract." But for Reavis' performance of its work under the BOA, the Fourth Circuit reasoned, the Plaintiff's injury would not have occurred. Accordingly, the requirement of a minimal causal connection between Reavis' work under the BOA and the Plaintiff's injury was satisfied and the trial court erred in granting Reavis' motion for summary judgment.

The Fourth Circuit went on, however, to affirm the trial court's grant of summary judgment to Reavis' insurer, Guilford Insurance Company. The BOA required Reavis to name Fluor as an additional insured on its general liability policy. The Additional Insured Endorsement in the Guilford policy provided coverage to Fluor for "liability arising out of [Fluor's] ongoing operations performed for that insured [Reavis]." In granting Guilford's motion for summary judgment, the trial court reasoned in part that the policy only provided coverage for the additional insured during "ongoing operations" and no coverage was available to Fluor because the operations were completed six months prior to the accident in question. The Fourth Circuit agreed, reasoning that "ongoing operations" cannot encompass liability arising after the insured's work was completed. Fluor's claims arising out of the Plaintiff's injury could not be covered under the Endorsement because Reavis' work on the trailer was completed and accepted by Fluor at the time of her injury. Accordingly, the trial court's grant of summary judgment was affirmed. Chief Judge James F. McKay dissented, noting such endorsements have been broadly construed and finding the policy language at least ambiguous, which should warrant the grant of summary judgment improper.

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