United States Court of Appeals, Fifth Circuit

308 F.
3d 477
Charles C. ROGERS, et al., Plaintiffs,

v.
SAMEDAN OIL CORPORATION, et al., Defendants.
Samedan Oil Corporation, Defendant-Third Party Plaintiff
Appellee-Cross-Appellant,
v.
Lexington Insurance Company, Third Party Defendant
Appellant-Cross-Appellee.
No. 01-30779.
United States Court of Appeals, Fifth Circuit.

October 14, 2002.
Richard A. Chopin (argued), Chopin, Wagar, Cole, Richard, Reboul &

Kutcher, Metairie, LA, for Samedan Oil Corp.
Patrick J. McShane (argued), Frilot, Partridge, Kohnke & Clements, New
Orlean, LA, for Lexington Ins. Co.
Appeals from the United States District Court for the Eastern District of
Louisiana.
Before DAVIS, SMITH and BENAVIDES, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
Appellant, Lexington Insurance Company ("Lexington"), challenges the district

court's summary judgment in favor of Appellee, Samedan Oil Corporation
("Samedan"). The district court concluded that Samedan's recovery against
Lexington under endorsements to liability policies issued to Samedan's
contractor, Pride Offshore, Inc. ("Pride"), was not barred by the Louisiana
Oilfield Indemnity Act ("LOIA"). La.Rev.Stat. 9:2780, et seq. We agree with
the district court that the LOIA does not invalidate Samedan's coverage because
the record is uncontradicted that Samedan paid the entire premium for that
coverage.
I.
2
Charles Rogers began this litigation when he filed a personal injury suit in state
court in Louisiana against Samedan. Samedan removed the suit to the federal
district court based on diversity. Several other parties were added thereafter.
When Rogers was injured he was employed by Pride and assigned to work
aboard Samedan's platform located in East Cameron Block 331 off the coast of
Louisiana. Rogers' employer, Pride, was operating the drilling rig pursuant to a
contract with Samedan on the Samedan platform. The parties settled Rogers'
action before trial for $475,000 of which Samedan contributed $100,000 and its
commercial general liability carrier, Commercial Underwriters Insurance
Company ("Commercial Underwriters"), contributed $274,250.
Upon settlement of the main demand, the only issues remaining before the
district court were those relating to the Third Party Demand asserted by
Samedan against Lexington. In its demand, Samedan sought recovery against
Lexington for settlement costs of $374,250 together with attorneys' fees and
statutory penalties under La. Rev. Stats. 22:658 and 22:1220.
Lexington is the liability insurer of Rogers' employer, Pride. Prior to Roger's

accident, Lexington issued a three-year commercial general liability policy and
an umbrella policy to Pride, with liability limits of $11 million dollars (the
"Lexington Policies"). Special endorsements entitled "Louisiana AntiIndemnity Statute Coverage" (the "Lexington Endorsements") were later added
to the Lexington Policies, naming Samedan as an additional insured in the
Lexington Policies.1 The Lexington Endorsements were added before Rogers'
accident.
Lexington charged Samedan two thousand dollars per year for the coverage
provided by the Lexington Endorsements. These separate premiums were paid
directly by Samedan with no contribution from Pride.
In August 1997, following demand upon Lexington for defense and

indemnification, Lexington assumed Samedan's defense of the Roger's suit.
However, in November 1999, after the Louisiana First Circuit Court of Appeal
denied rehearing Amoco Prod. Comp. v. Lexington Ins. Co., Lexington
informed Pride that it was withdrawing its defense and indemnity of Samedan.
See Amoco Prod. Comp. v. Lexington Ins. Co., 98-1676 (La.App. 1 Cir.
9/24/99) 745 So.2d 676, writ denied, 1999-3553 (La.2/25/00) 755 So.2d 253.
On cross Motions for Summary Judgment, the district court determined that the
LOIA did not preclude Samedan from enforcing its rights under the Lexington
Policies. After a trial on the remaining issues, the district court determined that
Lexington was liable to Samedan for its attorney's fees and settlement costs of
$374,250. However, the court found that Lexington's withdrawal of Samedan's
defense was not in bad faith, thus Samedan was not entitled to penalties or
damages under La. Rev. Stats. 22:658 and 22:1220. Both parties have appealed.
II.
9
Lexington first argues that the Lexington Endorsements, naming Samedan as

an additional insured are not enforceable under the LOIA. La.Rev.Stat. 9:2780,
et seq. As this issue was resolved on cross Motions for Summary Judgement,
we review it de novo. Apani Southwest, Inc. v. Coca-Cola Enters., 300 F.3d
620 (5th Cir.2002); Melton v. Teachers Ins. & Annuity Ass'n of Am., 114 F.3d
557, 559 (5th Cir.1997).
10
LOIA was enacted to prevent an "inequity foisted on certain contractors and

their employees by the defense and indemnity provision contained in some
agreements pertaining to wells for oil, gas or water, ... to the extent those
provisions apply to death or bodily injury to persons." La.Rev.Stat. 9:2780 A.
Through LOIA, the Louisiana Legislature declared null and void and against
public policy of the State of Louisiana any provision in such agreements which
require the defense or indemnification for death or bodily injury to persons
caused by the negligence or fault of the indemnitee. La.Rev.Stat. 9:2780 A.
11
LOIA also applies to certain insurance coverage supplied by the contractor.

Subsection G provides that "any provision in any agreement arising out of
operations, services or activities [covered by LOIA] which requires ...
additional named insured endorsements, or any other form of insurance
protection which would frustrate or circumvent the provisions of LOIA shall be
null and void and of no force and affect." La.Rev.Stat. 9:2780 G.
12
Consistent with the express language of Subsection G, courts generally hold

that contractual provisions requiring the contractor to extend its insurance
coverage to cover the principal's acts of negligence or fault are void under the
LOIA because these insurance arrangements frustrate the purpose of the Act.
See e.g. Roberts v. Energy Dev. Corp., 235 F.3d 935 (5th Cir.2000); Hodgen v.
Forest Oil Corp., 87 F.3d 1512 (5th Cir.1996); Davis v. Mobil Oil Exploration
& Producing Southeast, Inc., 864 F.2d 1171 (5th Cir.1989); Babineaux v.
McBroom Rig Bldg. Service, Inc. 806 F.2d 1282 (5th Cir.1987); Amoco Prod.
Company v. Lexington Ins. Co., supra. However, in Marcel v. Placid Oil Co.,
11 F.3d 563 (5th Cir.1994), this court recognized an exception to this rule. We
held that, when the principal pays the entire cost of its own insurance coverage
by securing an endorsement naming it as an insured in the contract or policy,
the purposes of the LOIA are not frustrated, and the insurance coverage is valid
and enforceable.
13
In Marcel, Placid Oil Company ("Placid"), the operator of an offshore platform,

contracted with SEE, Inc. ("SEE") to perform workover services on the
platform. As part of the agreement, SEE agreed to procure insurance at Placid's
expense indemnifying Placid and naming Placid as an additional insured.
Plaintiff, Marcel, worked as a roustabout and was injured in a slip and fall on
the platform. After being named as defendant, Placid filed a third party
complaint against SEE for failing to name Placid as an additional insured under
its insurance policy. The district court granted a summary judgment in favor of
SEE, determining that the agreement violated LOIA, and Placid appealed.
14
Relying on Patterson v. Conoco, Inc., 670 F.Supp. 182 (W.D.La.1987), Placid

argued on appeal that SEE's agreement to provide insurance indemnifying
Placid and identifying Placid as a named insured did not violate LOIA. In
Patterson, the court found that LOIA did not render invalid a provision
requiring the contractor to extend insurance coverage to the operator where the
operator actually paid for the cost of the insurance. Id. at 186. In Marcel, we
adopted the exception created by Patterson and stated:
15
We now adopt the exception created in Patterson as law of this Circuit and find
that it has potential application here. The LOIA is aimed at preventing the
shifting of the economic burden of insurance coverage or liability onto an
independent contractor. If the principal pays for its own liability coverage,
however, no shifting occurs. We see no need to prevent such an arrangement in
order to give effect to the LOIA. Indeed, agreements such as the one in
Patterson may be economically desirable in situations where it is less
expensive for the independent contractor to add the principal as an additional
insured than for the principal to obtain its own insurance on a particular
operation. Marcel v. Placid, 11 F.3d 563, 569-570.
16
Lexington asserts that the exception recognized in Marcel (the "Marcel

Exception") has no application to this case. Instead, Lexington relies on a
recent case decided by the Louisiana First Circuit Court of Appeal, also
involving a Lexington policy procured by Pride. Amoco Prod. Co. v. Lexington
Ins. Co., supra. In Amoco, the court permitted Lexington to invoke the
provisions of LOIA to invalidate claims by Amoco Production Company and
related companies for coverage under two Lexington policies. The Louisiana
First Circuit Court of Appeal determined that the Marcel Exception had no
application to the policies at issue in the lawsuit.
17
In its contract with Amoco, Pride agreed to defend and indemnify Amoco for
any and all liability exposure for losses arising out of Pride's operations under
the contract, even those occasioned as a result of Amoco's own fault or
negligence. The agreement also required Pride to insure its contractual
assumption of liability; however, the agreement did not require Pride to name
Amoco as an additional assured in Pride's liability policies. In October 1995,
three months after the accident giving rise to the underlying lawsuit, Pride and
Amoco met to discuss having Amoco added as an additional named insured
under Pride's primary and excess policies. As a result of this meeting, Amoco
was added as an additional named insured under two endorsements. Amoco and
Pride agreed that the endorsements were intended to have retroactive
application in order to cover the accident involved in the lawsuit.
18
The First Circuit Court of Appeal found the limitation in the Marcel Exception,
preventing its application if any material part of the costs of insuring the
indemnitee is borne by the independent contractor precluded the application of
the exception to the lawsuit. Id. at 680. This was based on its conclusion that
Amoco paid an insignificant portion of the premium, in contrast with the
amount of coverage provided. Id. at 681.
19
We are satisfied that Amoco is distinguishable from the facts of today's case
and, therefore, is not helpful in its resolution. First, in Amoco, the operator was
not named as an additional insured until after the accident occurred, a fact that
the court found significant in its analysis of whether the Marcel Exception
applied. Here, Samedan procured the coverage long before Rogers' accident.
Second and more significantly, in this case Lexington set the premium for the
endorsements naming Samedan as an additional insured, and Samedan
established that it paid the entire amount of the premium demanded by
Lexington for that coverage. We have no basis to question whether Lexington's
valuation of the premium fairly reflects the value of the coverage it willingly
extended to Samedan. Based on the Summary Judgment record, we agree with
the trial court that the record demonstrates without contradiction that no
material part of the costs of insuring Samedan was born by Pride. Thus, the
Lexington Endorsements fall within the purview of the Marcel Exception and,
consequently, do not violate the LOIA.
III.
20
Lexington next challenges the district court's ruling, allowing Samedan to assert
a claim for its insurer's, Commercial Underwriters', contribution to the Roger's
settlement. Lexington argues that Samedan was not the real party in interest to
this claim because it failed to prove that Commercial Underwriters assigned
Samedan its right to recover the sum it contributed to the settlement.2
Lexington raised this issue for the first time on the eve of trial. Although the
district court rejected this argument on the merits, it also concluded that
Lexington waived its right to make this challenge by its failure to timely object.
The district court did not abuse its discretion in holding that Lexington waived
this defense.
21
In Gogolin & Stelter v. Karn's Auto Imports, Inc., 886 F.2d 100 (5th Cir.1989)
we held that if a defendant fails to assert that a party is not the real party in
interest in a timely manner, the argument is waived. Gogolin & Stelter filed suit
against First City Bank, Bellaire, N.A. ("First City") alleging that First City
mishandled certain documentation relating to the purchase of two MercedesBenz automobiles. The cars were purchased by Karn's Auto Imports, Inc.
("Karn's") from Stelter G.m.b.H., a German importer. Because of First City's
handling of the paperwork, Karn's was able to obtain the autos and the
certificates of title without paying for them.
22
First City answered the Gogolin & Stelter's complaint by generally denying the
allegations. At that time, First City did not challenge Gogolin & Stelter's
authority as an assignee of the cause of action owned by Stelter G.m.b.H. First
City never moved to join Stelter G.m.b.H. as the real party in interest, and as in
the instant case, First City did not discover the lack of assignment during
pretrial discovery. First City raised the real party in interest challenge for the
first time on motion for directed verdict claiming Gogolin & Stelter failed to
prove the assignment at trial. This motion was denied by the district court. We
affirmed.
23
In Gogolin & Stelter, we acknowledged that Federal Rule of Civil Procedure

17(a)3 requires that an action shall be prosecuted in the name of the real party
in interest. Id. at 102. However, the Rule also contemplates that real party in
interest disputes should arise rarely and should be easily resolved. Id. These
disputes should be evident to a defendant at the onset of suit because the
defendant almost always knows whether suit has been filed by the party who
"owns" the claim. Id. Thus, the Rule also suggests that a defendant must timely
object to allow the joinder of the real party in interest. Rule 17(a) reads in part
as follows:
24
No action shall be dismissed on the ground that it is not prosecuted in the name
24
No action shall be dismissed on the ground that it is not prosecuted in the name
of the real party in interest until a reasonable time has been allowed after
objection for ratification of commencement of the action by, or joinder or
substitution of, the real party in interest... Fed.R.Civ.P. 17(a).
25
Consistent with this language requiring an opportunity for joinder of the real
parties in interest, the defense is waived when it is not timely asserted. Gogolin
& Stelter v. Karn's Auto Imports, 886 F.2d 100. The objection must be raised
when joinder is practical and convenient. Id. at 102. "The earlier the defense is
raised, the more likely that the high cost of trial preparation for both parties can
be avoided if a real party in interest question is determined adversely to a
plaintiff." Id. Thus, the goal of judicial efficiency is furthered.
26
As with the defendant in Gogolin & Stelter, Lexington has argued that
Samedan failed to prove that it was assigned Commercial Underwriter's rights.
Lexington raised this issue for the first time the day before trial. The district
court was entitled to conclude that this late notice did not afford Samedan a
meaningful opportunity to prove the assignment or allow Commercial
Underwriters an opportunity to join as a party to the lawsuit.
27
Although Lexington claims it had no knowledge that Commercial Underwriters

contributed to the settlement, Lexington had ample opportunity to conduct
discovery on this issue. At trial and on appeal, Lexington argues that Samedan's
discovery responses were less than forthright; however, our review of the
discovery requests propounded by Lexington shows that it never asked whether
other parties contributed to the settlement fund. Lexington had every reason to
believe that Samedan had liability insurance and that its insurer would
participate in any settlement. Also, Samedan's responses to discovery appear to
fairly answer the questions asked, and we glean no attempt by Samedan to
obfuscate the identities of the true parties at interest.4
28
For the reasons stated above, the district court did not abuse its discretion in
concluding that Lexington waived this defense under Rule 17(a) by failing to
assert it until the day before trial.
IV.
29
In its Cross-Appeal, Samedan challenges the district court's failure to award

penalties and attorney's fees under Louisiana Revised Statutes 22:658 and
22:1220. We agree with the district court that given the confused state of the
law regarding the enforceability of the additional insured endorsement under
the LOIA, Lexington's actions did not rise to the level of bad faith. The district
court did not err in rejecting Samedan's claim for statutory penalties and
damages under La.Rev.Stat. 22:658 and 22:1220.
V.
30
For the reasons stated above, we find no error in the district court's judgment.
Accordingly, the judgment of the district court is AFFIRMED.
Notes:
1
The Lexington Endorsements, policy number 95EN007790A and

95EN0007800A, read as follows:
PRIDE PETROLEUM SERVICES, INC. LOUISIANA ANTI INDEMNITY
STATUTE COVERAGE
It is hereon understood and agreed, with effect from Inception, that the
Indemnified Parties are Named Insureds under this Policy. Notwithstanding
anything contained to the contrary, the Insurance provided to the Indemnified
Parties hereunder excludes all liabilities other than those arising from
operations performed under Contract(s) between Operator and Contractor dated
TBA (the "Contract"). Such insurance shall be primary (and not excess of
contributing insurance, relating to any other policies carried by the Operator),
but only as to those claims an [sic] liabilities as to which the parties have stated
in the Contract their intent (independent of issues regarding enforceability) are
borne by Contractor.
In consideration of above, agree an additional premium of US$500 in full for
period per Operator, if required.
Indemnified Parties (Anticipated)
Samedan and/or its affiliated and/or associated and/or subsidiary companies.
And/or others as maybe [sic] agreed by written contract by the named Insured.
(Emphasis added).
PRIDE PETROLEUM SERVICES, INC. LOUISIANA ANTI INDEMNITY
STATUTE COVERAGE
It is hereon understood and agreed, with effect from Inception, that the
Indemnified Parties are Named Insureds under this policy, subject to the sublimit of US$10,000,000 hereon.
Notwithstanding anything contained to the contrary, the Insurance provided to
the Indemnified Parties hereunder excludes all liabilities other than those
arising from operations performed under Contract(s) between Operator and
Contractor dated TBA (the "Contract"). Such insurance shall be primary (and
not excess of contributing insurance, relating to any other policies carried by
the Operator), but only as to those claims an [sic] liabilities as to which the
parties have stated in the Contract their intent (independent of issues regarding
enforceability) are borne by Contractor.
In consideration of above, agree an additional premium of US$1,500 in full for
period per Operator, if required.
Indemnified Parties (Anticipated)
Samedan and/or its affiliated and/or associated and/or subsidiary companies.
And/or others as may be agreed by written contract by the named Insured.
(Emphasis added).
2
Lexington has also challenged Samedan's right to recover $105,593.21 in

attorney's fees paid by Pride; however, the district court expressly excluded this
sum from its judgment. Thus, there is no merit to Lexington's challenge
Rule 17. Parties Plaintiff and Defendant; Capacity

(a) Real Party in Interest. Every action shall be prosecuted in the name of the
real party in interest. An executor, administrator, guardian, bailee, trustee of an
express trust, a party with whom or in whose name a contract has been made for
the benefit of another, or a party authorized by statute may sue in that person's
own name without joining the party for whose benefit the action is brought;
and when a statute of the United States so provides, an action for the use or
benefit of another shall be brought in the name of the United States. No action
shall be dismissed on the ground that it is not prosecuted in the name of the real
party in interest until a reasonable time has been allowed after objection for
ratification of commencement of the action by, or joinder or substitution of, the
real party in interest; and such ratification, joinder, or substitution shall have the
same effect as if the action had been commenced in the name of the real party
in interest.
4
The district court's conclusion that Lexington waived this defense is consistent
with the law in this circuit and in other circuits as wellSee, e.g., United
HealthCare Corp. v. American Trade Ins. Co., 88 F.3d 563 (8th Cir.1996)
(failure to raise the assertion that plaintiff was not the real party in interest until
pretrial conference constituted a waiver); Hefley v. Jones, 687 F.2d 1383, 1388
(10th Cir.1982) (failure to raise the assertion that plaintiff was not the real party
until 16 days prior to trial constituted a waiver); Chicago & Northwestern
Transp. Co. v. Negus-Sweenie, Inc., 549 F.2d 47, 50 (8th Cir.1977); McLouth
Steel Corp. v. Mesta Machine Co., 116 F.Supp. 689, 691 (D.Pa.1953), affirmed
on other grounds, 214 F.2d 608 (3rd Cir.1954), cert. denied, 348 U.S. 873, 75
S.Ct. 109, 99 L.Ed. 687 (1954) (failure to raise the assertion that the plaintiff
was not the real party until 4 days prior to trial constituted a waiver).

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308 F.

Charles C. ROGERS, et al., Plaintiffs,

United States Court of Appeals, Fifth Circuit.

Richard A. Chopin (argued), Chopin, Wagar, Cole, Richard, Reboul &

Appellant, Lexington Insurance Company ("Lexington"), challenges the district

Lexington is the liability insurer of Rogers' employer, Pride. Prior to Roger's

In August 1997, following demand upon Lexington for defense and

Lexington first argues that the Lexington Endorsements, naming Samedan as

LOIA was enacted to prevent an "inequity foisted on certain contractors and

LOIA also applies to certain insurance coverage supplied by the contractor.

Consistent with the express language of Subsection G, courts generally hold

In Marcel, Placid Oil Company ("Placid"), the operator of an offshore platform,

Relying on Patterson v. Conoco, Inc., 670 F.Supp. 182 (W.D.La.1987), Placid

Lexington asserts that the exception recognized in Marcel (the "Marcel

In Gogolin & Stelter, we acknowledged that Federal Rule of Civil Procedure

Although Lexington claims it had no knowledge that Commercial Underwriters

In its Cross-Appeal, Samedan challenges the district court's failure to award

The Lexington Endorsements, policy number 95EN007790A and

Lexington has also challenged Samedan's right to recover $105,593.21 in

Rule 17. Parties Plaintiff and Defendant; Capacity

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