BARRY W. ASHE, District Judge.
This matter involves an indemnity dispute that arises out of a series of contracts between Chevron Chemical Company ("Chevron Chemical"), which plaintiff, Chevron Oronite Company LLC ("Chevron Oronite"), succeeds in interest, and J.E. Merit Constructors, Inc. ("J.E. Merit"), which the defendant, Jacobs Field Services North America, Inc. ("Jacobs"), succeeds in interest.
Pursuant to agreement of counsel at the final pretrial conference, the matter was submitted to the Court for decision on the papers, including the parties' trial memoranda,
1. The Court has diversity jurisdiction under 28 U.S.C. § 1332 because the parties are citizens of different states and the requisite amount in controversy is satisfied.
2. Plaintiff Chevron Oronite is the successor-in-interest to Chevron Chemical under the series of contracts at issue in this matter.
3. Defendant Jacobs is the successor-in-interest to J.E. Merit under the series of contracts at issue in this matter.
4. Chevron Oronite is a wholly-owned subsidiary of Chevron U.S.A., Inc.
5. From 1989 through 1993, Chevron Chemical engaged J.E. Merit to perform maintenance work, including providing welders, at Chevron Chemical's facility in Belle Chasse, Louisiana.
6. Wayne Bourgeois worked as a welder for J.E. Merit from 1989-1994.
7. In 2016, Bourgeois was diagnosed with mesothelioma.
8. In March 2017, Bourgeois sued various companies for which he worked, alleging exposure to asbestos.
9. Chevron Oronite tendered the lawsuit to Jacobs on July 24, 2017.
10. In a letter to Jacobs dated November 7, 2017, Chevron Oronite tendered the lawsuit a second time, referencing the applicable contracts Jacobs had produced in discovery, updating Jacobs about ongoing settlement negotiations, and again inviting it to defend Chevron Oronite in the Bourgeois lawsuit.
11. Nevertheless, Chevron Oronite continued to apprise Jacobs of the proposed settlement amounts (including Bourgeois' demand to Chevron Oronite of $895,000 as well as the range between which Chevron Oronite thought it could settle the case) and invited Jacobs' participation in settlement discussions in late November and early December of 2017.
12. Chevron Oronite settled the Bourgeois lawsuit on January 24, 2018, for $550,000.
13. As a result of the series of contracts between Chevron Chemical and J.E. Merit, indemnity agreements between Chevron Oronite and Jacobs were in effect when Bourgeois was allegedly exposed to asbestos while employed for J.E. Merit at Chevron's Belle Chasse facility.
14. The plain and unambiguous language of Section 3.4 of the indemnity agreements provides that Chevron Oronite may recover reasonable attorney's fees in connection with its defense and settlement of the Bourgeois suit and its pursuit of the instant suit against Jacobs.
15. Section 3.4 of the indemnity agreements also provides for recovery of ordinary costs of litigation.
16. On March 2, 2018, Chevron Oronite filed a complaint for breach of contract, alleging that Jacobs refused to satisfy its contractual obligation to indemnify Chevron Oronite.
17. On April 19, 2018, Jacobs filed its answer, generally denying the allegations of the complaint on the basis that Chevron Oronite had no liability to Bourgeois in the underlying Bourgeois case and that Jacobs is not liable to Chevron Oronite for defense and indemnity of that case.
18. On October 10, 2018, on cross-motions for summary judgment,
19. Thus, Chevron Oronite had shown it was potentially liable to Bourgeois in the underlying suit and that it was entitled to attorney's fees and ordinary costs incurred in defending and settling the Bourgeois suit and in prosecuting the instant suit.
20. On March 9, 2017, Bourgeois filed suit in state court against numerous defendants, including Chevron Oronite, seeking damages related to mesothelioma caused by his alleged exposure to asbestos.
21. As to Chevron Oronite, Bourgeois alleged he was exposed to asbestos while working for one and a half to two years as a welder for J.E. Merit at Chevron Chemical's Belle Chasse facility.
22. Bourgeois was 65 years old when diagnosed with mesothelioma and died from mesothelioma approximately 16 months later.
23. In the underlying case, the Bourgeois plaintiffs sued over two-dozen individually-named defendants grouped in the following categories: "employer defendants"; "premises defendants" (including Chevron Oronite); "premises contractor defendants"; "asbestos abatement contractor defendants"; "asbestos manufacturer defendants"; and "asbestos supplier defendants."
24. In perpetuation depositions, Bourgeois testified that he was exposed to asbestos while working at or for certain entities (Avondale, H.B. Fowler, Williams-McWilliams, Good Hope Refinery, Payne & Keller, Chevron, Kostmayer, J.E. Merit, BP Oil Refinery, Performance, Exxon, Tenneco, Shell, Johns-Manville, Monsanto, and Comet Construction) from pipe insulation, fire blankets, gaskets, and gloves manufactured by unknown manufacturers and supplied by unknown suppliers; or from being around his father and brother who worked at or for some of these entities, or workers at Cajun Insulation Company and other unknown insulator workers.
25. In light of these exposures to asbestos, Jacobs argues that Chevron Oronite could have potentially shared liability with at least two-dozen other persons or entities (including Avondale; unknown manufacturers of pipe insulation; unknown suppliers of pipe insulation; unknown manufacturers of asbestos fire blankets; unknown suppliers of asbestos fire blankets; H.B. Fowler; Williams-McWilliams; Good Hope Refinery; unknown insulator workers; Payne & Keller; Kostmayer; J.E. Merit; unknown manufacturers of gaskets; unknown suppliers of gaskets; BP Oil; Performance; Exxon; unknown manufacturers of asbestos gloves; unknown suppliers of asbestos gloves; Tenneco; Shell; Cajun Insulation Company; Johns-Manville; Monsanto; Comet Construction; unknown manufacturers of welding rods; unknown suppliers of welding rods), so that all twenty-four of these other persons or entities should be deemed to share equal responsibility with Chevron Oronite for Bourgeois' mesothelioma.
26. But the obverse is equally true: there is nothing about the evidence that conclusively establishes that Chevron Oronite's share of the potential liability for Bourgeois' claims was less than the settlement amount as a proportion of the total claim value.
27. In its submissions to the Court, Jacobs has made no effort to demonstrate that the settlement amount ($550,000) Chevron Oronite paid to Bourgeois was unreasonable, because Jacobs insists that Chevron Oronite had the affirmative burden to show that the amount was reasonable and that Chevron Oronite has not carried its burden. As a consequence, Jacobs contends that the Louisiana law in effect at the time of the alleged asbestos exposures and on the date of Bourgeois' death requires that the potential damages on Bourgeois' claims be shared equally among all defendants alleged to have caused any asbestos exposure contributing to Bourgeois' mesothelioma.
28. Jacobs recites the Louisiana law applicable to Bourgeois' claims and any assessment of the reasonableness of a settlement of such claims, to be as follows:
29. Jacobs did not adduce any evidence regarding the comparative role the alleged exposures played in causing Bourgeois' mesothelioma. Nor did Jacobs attempt to rank the alleged exposures in order of the degree to which each may have played a role in Bourgeois' disease.
30. For these reasons, Jacobs has not satisfied its burden of proving that Chevron Oronite's settlement with the Bourgeois plaintiffs was not reasonable.
31. Assuming a total affirmed judgment mirroring those in the comparable cases identified by both Jacobs and Chevron Oronite (see Finding of Fact ¶28(h) & (i) and note 48, supra) the $550,000 Chevron Oronite paid to settle the Bourgeois falls well within the range of damage awards in those cases.
32. Accordingly, the amount Chevron Oronite paid to settle the Bourgeois lawsuit was reasonable.
33. In sum, the indemnity agreements in the series of contracts between Chevron Chemical and J.E. Merit require Jacobs to indemnify Chevron Oronite for the entire settlement amount of $550,000 it paid to settle the Bourgeois suit.
34. The hourly attorney and paralegal rates paid by Chevron Oronite for legal services in the defense of the underlying Bourgeois suit and in the instant suit (i.e., $350 and $290 for partners, $215 and $190 for associates, and $115 and $100 for paralegals) are well within the range of fees found to be reasonable in this District.
35. The number of total hours Chevron Oronite expended for legal services in defending and settling the Bourgeois suit and in prosecuting the instant suit against Jacobs is reasonable.
36. The average hourly rates, in light of the total number of hours expended, are reasonable.
37. Chevron Oronite incurred $99,333.50 in attorney's fees and $8,279.68 in ordinary litigation costs in defending and settling the Bourgeois suit.
38. The total amount of $107,613.18 Chevron Oronite incurred in attorney's fees and costs in defending and settling the Bourgeois suit is reasonable.
39. Chevron Oronite incurred $146,016.50 in attorney's fees and $18,628.66 in costs prosecuting the instant suit against Jacobs.
40. The total amount Chevron Oronite incurred in attorney's fees in prosecuting the instant suit is reasonable.
41. Of the $18,628.66 in costs Chevron Oronite incurred in prosecuting the instant suit, $16,380.00 consists of unrecoverable expert witness fees, leaving the amount of $2,248.66 in ordinary litigation costs, which the Court finds is reasonable.
1. On summary judgment, this Court held that Chevron Oronite's tender to Jacobs, as indemnitor, of the defense of the Bourgeois suit was sufficient under Louisiana law for application of the potential liability standard — that is, that Chevron Oronite need only show that it was potentially liable to Bourgeois to trigger Jacobs' indemnity obligation to Chevron Oronite under the contracts at issue.
2. On summary judgment, this Court also held that Chevron Oronite established that the Bourgeois suit exposed it to potential liability so as to trigger Jacobs' indemnity obligation under the contracts at issue.
3. Having established on summary judgment that the indemnity agreements were in effect when Bourgeois was allegedly exposed to asbestos while employed by J.E. Merit at Chevron's Belle Chasse facility, and that Chevron Oronite was potentially liable to Bourgeois for the claims asserted in the underlying Bourgeois suit, Chevron Oronite met its first hurdle to indemnification. The next question is whether the $550,000 settlement Chevron Oronite paid to Bourgeois was reasonable — an issue the parties agreed would be tried on the submissions made to the Court on November 5, 2018.
4. In Wisconsin Barge Line, Inc. v. Barge Chem 300, the Fifth Circuit held that, once the indemnitee shows that it was potentially liable, the burden shifts to the indemnitor to show that the settlement the indemnitee entered with the plaintiff in the underlying case, without the indemnitor's prior approval, was unreasonable.
5. Jacob contends that the rule of law stated in Wisconsin Barge Line (the "Wisconsin Barge Line rule") is limited to maritime cases. Citing Parfait v. Jahncke Serv. Inc., 484 F.2d 296 (5th Cir. 1973), and Molett v. Penrod Drilling Co., 826 F.2d 1419 (5th Cir. 1987), Jacob contends that, under Louisiana law, the indemnitee, not the indemnitor, bears the burden of demonstrating that the settlement was reasonable.
6. In Parfait, a maritime case rather than one arising under Louisiana law, the Fifth Circuit held that the indemnitee did carry its burden of showing its potential liability (by keeping the indemnitor informed of settlement negotiations and by tendering defense of the original action to the indemnitor) and also carried its burden of showing that the settlement was reasonable in amount. 484 F.2d at 305-06. In so holding, the court did not engage in a highly-developed analysis of the applicable law. Had it done so, the applicable law would have been maritime law, not Louisiana law. Thus, contrary to Jacob's contention, Parfait does not stand for the proposition that, under Louisiana law, the indemnitee in a potential-liability case bears the burden of demonstrating that the settlement was reasonable.
7. Having been rendered in 1977, the Wisconsin Barge Line rule is the more recent pronouncement of the law in the Fifth Circuit on who bears the burden of showing the reasonableness or unreasonableness of a settlement in a potential-liability case, as opposed to the holding of Parfait, which was decided in 1973. And the Wisconsin Barge Line rule has been followed consistently in maritime and other potential-liability cases decided in the Fifth Circuit since 1977. See Chevron Oronite v. Cajun, 2017 WL 3438340, at *7 n.75 (diversity); Gilbert, 1997 WL 149959, at *12 (maritime).
8. Molett was a diversity case involving a product liability claim governed by Louisiana law. However, in articulating the relevant law, the Fifth Circuit relied on no Louisiana law or cases, but instead, based its statement of the law on the line of maritime cases including Parfait:
826 F.2d at 1429 (citations omitted). Moreover, the Molett court cited to no case, whether arising under maritime or Louisiana law, for the specific proposition that the indemnitee, in a potential-liability case, bears the burden of demonstrating the reasonableness of the settlement. Most telling, even if it had, the proposition would have been dicta in Molett because the court held that the indemnitee was required to demonstrate its actual liability, having failed to establish the prerequisites for applying a potential-liability standard (by tendering to the indemnitor defense of the suit or tendering the proposed settlement for approval). Thus, again contrary to Jacob's contention, Molett was neither a potential-liability case nor one where the operative legal proposition was decided under Louisiana law.
9. Consequently, neither Parfait nor Molett stands for the legal proposition for which Jacobs cites them — namely, that, under Louisiana law, the indemnitee, not the indemnitor, bears the burden of demonstrating that the settlement was reasonable in a potential-liability case.
10. The only non-maritime potential-liability case cited to the Court that applies the Wisconsin Barge Line rule is Chevron Oronite v. Cajun, 2017 WL 3438340, at *7 n.75. In that case, the court generally applied Louisiana law to other issues, but did not cite any Louisiana case in support of the Wisconsin Barge Line rule.
11. Thus, neither party has cited any Louisiana decisions reflecting an application of the Wisconsin Barge Line rule in potential-liability cases, but nor have they cited any Louisiana decisions to the contrary.
12. In addressing the topic of settlements entered into by an insured with an injured party, a leading insurance treatise concludes: "[An insurer] can deny liability only to the extent that the settlement amount was excessive in light of the facts known or reasonably available to the insured at the time of settlement. The burden should, in general, be on the insurer, since its breach of contract [i.e., by failing to extend coverage] gave rise to the insured's unauthorized settlement, to prove that the settlement amount was unreasonable. If the insured paid the settlement with its own money, the settlement amount should be presumed to be reasonable."
13. Considering the foregoing analysis, this Court makes an "Erie guess"
14. Because Chevron Oronite has already demonstrated that it is potentially liable,
15. Because Jacobs bears the burden of demonstrating that the $550,000 settlement Chevron Oronite paid to Bourgeois was unreasonable, and because Jacobs has not adduced any evidence concerning the extent to which any of the claimed exposures to asbestos caused by other Bourgeois defendants contributed to Bourgeois' mesothelioma to any greater or lesser degree than did the exposures at Chevron's Belle Chasse facility during the 1989-1993 timeframe as to which Chevron Oronite has established Jacobs' potential liability, the Court cannot conduct the assessment of comparative fault Jacobs contends is required by the law it cites. Hence, Jacobs has not borne its burden of showing that the settlement was unreasonable.
16. As a consequence, Jacobs is liable to indemnify Chevron Oronite for the full amount of the settlement ($550,000) Chevron Oronite paid to settle the Bourgeois case.
17. On summary judgment, this Court also held that, under the indemnity agreements between J.E. Merit and Chevron Chemical, Chevron Oronite is entitled to recover from Jacobs the attorney's fees and ordinary costs of litigation Chevron Oronite incurred in defending and settling the Bourgeois suit and in prosecuting the instant action against Jacobs to enforce the indemnity.
18. Chevron Oronite bears the burden of demonstrating the amount and reasonableness of the fees and costs it incurred in defending and settling the Bourgeois suit and in prosecuting the instant action to enforce the indemnity. See Abshire v. Mar-Con, Inc., 1998 WL 404796, at *2 (E.D. La. July 16, 1998).
19. The trial court is vested with great discretion in assessing the reasonableness of attorney's fees and costs and in arriving at an award. See, e.g., NOP, LLC v. Kansas, 2011 WL 1485287, at *2 (E.D. La. Mar. 23, 2011) (applying Louisiana law).
Pacific Dawn, L.L.C. v. New Orleans Marine Servs., Inc., 2012 WL 14269, at *1 (E.D. La. Jan. 14, 2012).
21. Courts in this District have found hourly rates for attorneys in the range between $325 and $410 for partners and $225 and $275 for associates and for paralegals in the range of $95 to $100 to be reasonable. See, e.g., Funez v. EBM, 2018 WL 5004806, at *3 (E.D. La. Oct. 16, 2018 (finding partner rate of $350/hour and paralegal rate of $100/hour both reasonable); Soonhee Kim v. Ferdinand, 2018 WL 1635795, at *4 (E.D. La. Apr. 5, 2018) (finding rate of $410/hour is typical for partners in New Orleans community); DirectTV, LLC v. Ertem, 2015 WL 459398, at *3 (E.D. La. Feb. 3, 2015) (approving hourly rates of $350 for partners, $250 for associates, and $95 for paralegals); Dardar v. T&C Marine, L.L.C., 2018 WL 3950396, at *6 (E.D. La. May 3, 2018), adopted, 2018 WL 3927501 (E.D. La. Aug. 16, 2018) (finding partner rate of $350/hour and associate rate of $225/hour reasonable); M C Bank & Tr. Co. v. Suard Barge Serv., Inc., 2017 WL 6344021, at *2 (E.D. La. Dec. 12, 2017) (finding partner rates of $395/hour and $350/hour and associate rate of $225/hour reasonable); Offshore Marine Contractors, Inc. v. Palm Energy Offshore, LLC, 2014 WL 5039670, at *8-9 (E.D. La. Sept. 25, 2014) (approving partner rates of $325/hour, associate rates of $275/hour and $225/hour, and $100/hour for paralegals).
22. Ordinary costs of litigation are included within the term "loss" as used in Section 3.4 of the indemnity agreements and are owed by Jacobs to Chevron Oronite as a part of its indemnity obligation under the applicable contracts between Chevron Chemical and J.E. Merit.
23. Costs outside the ambit of ordinary costs of litigation (for example, expert witness fees, cf. Crawford v. J.T. Gibbons, Inc., 482 U.S. 437 (1987)) are not reasonable under Section 3.4 of the indemnity agreements.
24. "The general rule in Louisiana is that legal interest runs from the due date of the obligation in question." In re Settoon Towing, L.L.C., 720 F.3d 268, 285 (5th Cir. 2013) (quotation omitted) (citing Arceneaux v. Amstar Corp., 969 So.2d 755, 785 (La. App. 2007) (insurer liable to insured for prejudgment interest on amount insured paid third parties in settlement from date of payment)).
Accordingly, for the foregoing reasons,
IT IS ORDERED that judgment be entered in favor of Chevron Oronite Company, LLC and against Jacobs Field Services North America, Inc. on Chevron Oronite's Complaint in the amount of $550,000.00 for the full amount of the Bourgeois settlement, together with prejudgment interest from the date Chevron Oronite paid the settlement amount, plus post-judgment interest; and $107,613.18 for attorney's fees and costs incurred by Chevron Oronite in defense of the Bourgeois suit, and $148,256.16 for the attorney's fees and costs incurred by Chevron Oronite in prosecuting the captioned suit against Jacobs, together with post-judgment interest on the total amount awarded for fees and costs.
