Federal judge rules Phillips 66 isn't entitled to coverage from contractor's insurer in pipeline explosion case

By Karen Kidd | Feb 21, 2019

NEW ORLEANS — A Texas-based multinational energy company is not entitled to defense or coverage from a contractor's insurer in a personal injury lawsuit filed by workers following a natural gas pipeline explosion, a federal judge recently ruled.

Neither Blanchard Contractors nor Blanchard's insurer, Atlantic Specialty, owe a duty to defend or indemnify Houston-based Phillips 66 in the personal injury lawsuits filed by two workers following the explosion, U.S. District Court Judge Eldon Fallon ruled Feb. 5. In his 11-page order and reasons, Fallon, on the bench in Louisiana's Eastern District, ruled that the Louisiana Anti-Indemnity Act (LAIA) voided any duty Blanchard or Atlantic had to defend or indemnify Phillips 66 under their agreed Master Service Agreement (MSA).

The LAIA applies to contracts over "design, construction, alteration, renovation, repair or maintenance" of oil and gas lines but "carves out an exemption" for oil flow lines and gas-gathering lines that carry commingled oil or gas, Fallon said in his order. "The MSA thus falls within the scope of LAIA unless the pipeline was a 'gas gathering' line."

The MSA between Blanchard Contractors and Phillips 66 was for pipeline work that included a "knock-for-knock indemnity agreement" for personal injury claims regardless of fault, according to the background portion of the order. Phillips 66 and Blanchard were performing a pigging operation part of the pipeline when the explosion occurred.

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The explosion caused a three-day fire in 2017 near the Williams Discovery natural gas plant in Paradis, west of New Orleans. That explosion killed one employee, 36-year-old Joshua Helms of Thibodaux, and injured Blanchard employees Desmond Calloway and Jacob Jambon, according to news reports at the time.

Helms' widow filed suit in the Thibodaux District Court against Blanchard, but that case was not part of Fallon's order, which stems from lawsuits filed by Calloway and Jambon. After those lawsuits were filed, Phillips 66 demanded defense and indemnity from Blanchard, per the MSA. Blanchard, in turn, proffered Phillips 66's claims to Blanchard's insurer, Atlantic Specialty.

Atlantic Specialty filed for declaratory judgment in Calloway and Jambon's case, claiming indemnity and insurance provisions in the MSA violate the Louisiana Anti-Indemnity Act. Phillips 66 counterclaimed against Atlantic and made a third-party demand against Blanchard, asking the court to declare indemnity and other insured provisions of the MSA to be valid and enforceable.

Meanwhile, Excess Underwriters asked the court for summary judgment, claiming that Phillips 66 is not an "additional insured" entitled to coverage and Phillips 66 filed motions for summary judgment, claiming the LAIA does not apply and that Atlantic Specialty has a duty to defend.

Fallon denied Phillips 66's motions, finding the LAIA voids any duty of Blanchard or Atlantic to defend or indemnify and granted motions by Blanchard, Atlantic and Excess Underwriters.

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