Justin Parker and Gregory Gumpert v. Zurich American Insurance Company, The Shaw Group, Inc. and Gregory Beasley

NOT DESIGNATED FOR PUBLICATION

STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT

1 2018 CA 0903

JUSTIN PARKER AND GREGORY GUMPERT

VERSUS

ZURICH AMERICAN INSURANCE COMPANY, THE SHAW GROUP, INC.
AND GREGORY BEASLEY

Judgment rendered AUG 2 7 2039

On Appeal from the
Twenty -Second Judicial District Court
In and for the Parish of St. Tammany
State of Louisiana
No. 2006- 15075, Div. " D"

The Honorable Peter Garcia, Judge Presiding

Richard S. Vale Attorneys for Plaintiffs/ Appellees
Eric E. Pope Zurich American Insurance Company
Brett W. Tweedel and The Shaw Group, Inc.
Metairie, LA

Brett E. Kinchen Attorneys for Third Party Defendant
Stephen F. Butterfield HKA Enterprises, Inc.
Benjamin H. Dampf
Baton Rouge, LA

BEFORE: McDONALD, CRAIN, AND HOLDRIDGE, JJ.

111lieD-,

HOLDRIDGE, J.

In this contract dispute, HKA Enterprises, Inc., appeals a summary judgment

granted in favor of The Shaw Group, Inc., and Zurich American Insurance

Company on their indemnity, attorney' s fees, and breach of contract claims. We

reverse and remand.

BACKGROUND

Some of the facts forming the basis of this appeal were discussed by this

court in a prior appeal. Parker v. Zurich, 2016- 0442 ( La. App. 1 Cir. 12/ 22/ 16),

2016 WL 7407383. On October 12, 2005, Justin Parker was driving an

International truck, owned by The Shaw Group, Inc., on Interstate 12 in Baton

Rouge, Louisiana. Gregory Gumpert was a guest passenger in the truck. The truck

driven by Mr. Parker was rear- ended, and a lawsuit seeking personal injury

damages was filed by Mr. Parker and Mr. Gumpert on October 10, 2006. In the

petition, the plaintiffs appear to allege that a truck owned by The Shaw Group,

Inc., and operated by Gregory Beasley, rear-ended another truck owned by The

Shaw Group, Inc., pushing that vehicle into Mr. Parker' s truck.

The underlying lawsuit was filed against The Shaw Group, Inc., and its

insurer, Zurich American Insurance Company ( collectively referred to as " Shaw"),

and Mr. Beasley. The plaintiffs alleged that Shaw owned the truck Mr. Beasley

was driving, that Mr. Beasley was an agent or employee of Shaw, and that he was

on a mission for Shaw at the time of the accident, making Shaw liable for Mr.

Beasley' s negligence under the doctrine of respondeat superior. They also

claimed that Shaw negligently entrusted the vehicle to Mr. Beasley. Shaw denied

liability for the accident, but admitted that Mr. Beasley was in the course and scope

of his employment for Shaw and that he had permission to operate the Shaw

vehicle at the time of the accident.

2

Shaw settled the claims of Mr. Gumpert, and on April 4, 2009, Mr.

Gumpert' s lawsuit against Shaw was dismissed with prejudice. Thereafter, on

October 18, 2011, Shaw filed a third party demand against HKA Power Services,

LLC ( HKA Power), in which it asserted that Mr. Beasley was an employee of

HKA Power performing services for Shaw pursuant to a labor service agreement

for the provision of supplemental labor at the time of the accident. Shaw

maintained that it was entitled to a defense and indemnity with respect to the

claims of Mr. Gumpert and Mr. Parker because: ( 1) at the time of the accident,

there was a Master Supplemental Labor Services Agreement between HKA Power

and Energy Delivery Systems ( EDS), a wholly owned subsidiary of Shaw, in

which HKA Power agreed to provide supplemental labor to EDS and its affiliated

entities ( sometimes referred to herein as the " 2003 Master Agreement" or " the

agreement"); (
2) at the time of the accident, Mr. Beasley was an employee of HKA

Power providing supplemental labor pursuant to that contract; ( 3) the 2003 Master

Agreement obligated HKA Power to fully defend, indemnify, and hold harmless

EDS and all affiliated companies from any claims, demands, causes of action of

any kind, losses, damages, costs, and expenses arising from injuries caused in part

by the negligence of HKA Power' s employees; and ( 4) the 2003 Master

Agreement obligated HKA Power to add EDS and its affiliates as additional

insureds on all commercial general liability and automobile liability policies

covering the acts of HKA Power' s employees. Shaw sought to recover all costs of

the underlying lawsuit, including attorney' s fees, and all sums expended to settle

Mr. Gumpert' s personal injury claim.

In an amended third party demand filed in 2012, Shaw added HKA

Enterprises, Inc. ( HKA Enterprises) as a defendant, alleging that HKA Enterprises

is the parent company and/or successor entity to HKA Power. Shaw reiterated all

3

of the allegations of the original third party demand against HKA Enterprises,

seeking indemnification for all claims asserted by Mr. Parker and Mr. Gumpert

pursuant to the 2003 Master Agreement, as well as attorney' s fees.

Shaw amended its third party demand against HKA Enterprises to

alternatively assert it was entitled to virile share contribution for the payment of

settlement proceeds to Mr. Gumpert and for all sums paid for property damages.

On September 26, 2013, Shaw again amended its third party demand to assert a

breach of contract claim against HKA Enterprises. Therein, Shaw alleged that

HKA Enterprises is the parent company and/ or successor entity to HKA Power,

and that Shaw acquired EDS on November 21, 2003. Shaw' s breach of contract

claim was based on Paragraph 8. 1 of the 2003 Master Agreement which required

HKA Power to have commercial general and automobile liability insurance in

effect during the term of the agreement, and Paragraph 8. 2 of that agreement

requiring that all insurance be endorsed to add EDS and its affiliates as additional

insureds. Shaw alleged that HKA Enterprises failed to add EDS as an additional

insured on its insurance policies in breach of the 2003 Master Agreement, entitling

Shaw to recover from HKA Enterprises damages resulting from that breach,

including: ( 1) any and all expenses incurred in this matter, including court costs

and fees; ( 2) all amounts paid to any party as a result of this accident; ( 3)

attorney' s fees incurred in connection with defending the plaintiffs' claims, and ( 4)

all attorney' s fees incurred by Shaw in seeking to enforce the obligations owed by

HKA Enterprises pursuant to the 2003 Master Agreement.

In answers to the third party demands, HKA Enterprises alleged that HKA

Power was dissolved in July of 2005, and admitted that HKA Enterprises had taken

over the activities of HKA Power " to a certain extent," which was not known at

that time. In an amended petition, Mr. Parker added HKA Enterprises as a

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defendant, alleging that HKA Enterprises is the parent and/or successor entity to
HKA Power and that HKA Enterprises is liable for the negligence of its employee,

Mr. Beasley. Mr. Beasley, who never was served with a copy of the petition, was

dismissed from the lawsuit on April 2, 2013.

On March 17, 2014, Shaw filed a motion for partial summary judgment in

which it sought a judgment decreeing that it is owed a defense and indemnity from

HKA Enterprises as stipulated in the 2003 Master Agreement, or alternatively, that

HKA Enterprises breached the 2003 Master Agreement by failing to obtain the

required insurance. In its supporting memorandum, Shaw argued that HKA

Enterprises assumed control of HKA Power in July of 2005, and despite the

change in ownership, Shaw and HKA Enterprises continued to operate in

accordance with the terms of the 2003 Master Agreement during and after the

accident in question.

In support of the motion, Shaw attached to its memorandum the affidavit of

Steve Allison, the vice president of Shaw' s Corporate Risk Management

department, who attested that Shaw' s records showed that: ( 1) HKA Power is a

provider of supplemental labor; ( 2) on November 14, 2003, HKA Power and EDS

entered into the 2003 Master Agreement; ( 3) on October 12, 2005, an EDS vehicle

being operated by Mr. Beasley was involved in the subject accident; ( 4) EDS was a

wholly owned subsidiary of Shaw on the date of the accident; ( 5) at the time of the

accident, Mr. Beasley was an employee of HKA Power and was performing work

for EDS pursuant to the 2003 Master Agreement; ( 6) pursuant to Article 9, Section

1 of the 2003 Master Agreement, HKA Power was operating as an independent

contractor at the time of the accident; and ( 7) pursuant to Article 11, Section 1 of

the 2003 Master Agreement, HKA Power agreed to indemnify and defend EDS

from any claims based on the negligence of the employees of HKA Power.

5

The 2003 Master Agreement filed in support of Shaw' s motion was executed

by HKA Power and EDS on November 14, 2003, to be in effect for a term of two

years.
HKA Power, a company providing supplemental labor, and EDS, an energy

delivery service, entered into the agreement to enable EDS and its subsidiaries to

obtain supplemental labor from HKA Power on an as -needed basis. Pursuant to

the agreement, HKA Power agreed to provide qualified " Assigned Employees" to

EDS. Article 9, Section 1 of the agreement sets forth an independent contractor

relationship between HKA Power and EDS, specifically providing that HKA

Power employees, including its assigned employees, would not be considered EDS

employees for any purpose whatsoever. Article 11. 1 contains an indemnity

provision, which reads as follows:

HKA Power] agrees to indemnify, defend and hold EDS, its
directors, officers, employees, agents, representatives, insurers,
contractors [ excluding HKA Power] and
subsidiary, affiliated

companies and their respective directors, officers, employees, agents,
representatives, insurers and contractors [
excluding [ HKA Power])
collectively, the " Indemnified Parties") harmless from and against all
claims, demands, causes of action of every kind and character, losses,
damages, costs and expenses ( including attorneys' fees and other costs
of investigation and defense), including any arising from any injury of
or death to persons, damage to or destruction of property ... whether
contractual, in tort, or as a matter of strict liability or liability imposed
by statute, regulations, or ordinances, arising out of, in whole or in
part, ( i) a determination by any court of competent jurisdiction that

any Assigned Employee is an employee of EDS, ( ii) the breach or
alleged breach by [ HKA Power] of any provision of this Agreement
iii) any violation or alleged violation of law by [ HKA Power], its
employees ( including
the Assigned Employees), agents or third
parties over which it has control ....The indemnity provided in this
Article applies even though any such claim, demand, cause of action,
loss, damage, cost or expense may be attributable to the joint,
concurrent or contributory negligence of any Indemnified Party.

In support of its breach of contract claim, Shaw relied on Articles 8. 1 and

8. 2 of the 2003 Master Agreement, entitled " Insurance." Article 8. 1 provides that

during the term of the agreement, HKA Power shall maintain, with respect to all

assigned employees, commercial general liability insurance against claims for

0

damages resulting from personal injury " at each site" and automobile liability

insurance against claims for damages resulting from bodily injury that may arise

from the operation of any owned, hired, or non -owned automobiles with minimum

limits of $ 1, 000, 000. 00 for each accident. Article 8. 2 provides that "[ a] ll

insurance, except workers' compensation, shall be endorsed to add as an additional

insured EDS, its affiliates, and, as requested by EDS, such other contractors of

EDS with whom any Assigned Employee may work."

In support of its motion for summary judgment, Shaw also offered HKA

Enterprises' responses to Shaw' s request for answers to interrogatories and

production of documents. In the responses, HKA Enterprises asserted that Mr.

Beasley was an employee of HKA Enterprises, working for EDS, and driving a

Shaw/EDS owned vehicle with the permission of Shaw/EDS at the time of the

accident. HKA Enterprises admitted that it had no evidence that it, HKA Power, or

any of its affiliates maintained a policy of insurance naming Shaw, EDS, or any of

their affiliated entities as additional insureds to any policy of insurance. When

asked to explain the relationship between HKA Enterprises and HKA Power, HKA

Enterprises stated that HKA Power was an individual limited liability company

that originally provided temporary staff to EDS, a division of Duke Energy, and

that when HKA Power was closed in July of 2005, its existing staff was carried

over to HKA Enterprises. Documents filed in support of the motion and by HKA

Enterprises in response to discovery requests included Mr. Beasley' s employee

payment history from 2000 through early 2012 containing references to " Energy

Delivery Services," a spreadsheet showing that Mr. Beasley was deployed on

September 25, 2005, as a lineman/ serviceman and assigned a bucket truck, and a

Shaw accident report of Mr. Beasley' s accident listing " Energy Delivery Services"

as its subsidiary.

7

In opposition to the motion, HKA Enterprises argued that the 2003 Master

Agreement executed between HKA Power and EDS is not binding on the parties in
this case. It submitted that there is a genuine issue of material fact as to whether

that agreement can be enforced by Shaw against HKA Enterprises, when, at the

time of the accident, HKA Power and EDS were no longer in existence. HKA

Enterprises further pointed out that Shaw' s motion assumed that the 2003 Master

Agreement is binding on the subsequent entities, but Shaw offered no evidence in

support of that position. In support of its opposition, HKA Enterprises filed the

affidavit of Gary Davis, its Senior Account Executive and Director of Contracts,

who attested that he reviewed all of HKA Enterprises' records, which included the

2003 Master Agreement and that HKA Enterprises had no records of any

additional contracts entered into with EDS.

Secondly, HKA Enterprises argued that even if the 2003 Master Agreement

is binding on the parties, Shaw' s motion should be denied because of EDS' failure

to adhere to the terms of that agreement. Specifically, HKA Enterprises pointed to

the absence of any work orders describing the work to be performed by Mr.

Beasley and written authorization to operate the vehicle in question as required by

Article 1. 2 of the 2003 Master Agreement. In his affidavit, Mr. Davis attested that

HKA Enterprises has no records of a work order being issued by EDS and no

records or documentation from EDS authorizing Mr. Beasley to operate the truck

at the time of the accident as required by the 2003 Master Agreement. HKA

Enterprises also claimed that the deposition testimony of Steven Allison, of which

it did not yet have a transcript, created a genuine issue of material fact as to

whether HKA Enterprises breached the 2003 Master Agreement by failing to

obtain the requisite insurance.

N.

Finally, HKA Enterprises argued that even if the court were to find that the

2003 Master Agreement required HKA Enterprises to indemnify Shaw in some

circumstances, it did not require HKA Enterprises to pay any costs accrued in the

defense of or in the resolution of Mr. Gumpert' s settlement, which occurred prior

to HKA Enterprises' entry into the litigation. HKA Enterprises relied on a

provision of the indemnity agreement giving EDS the right to have a representative

present for any settlement of any matter giving rise to an indemnification objection

under Article 11. 2 of the 2003 Master Agreement.

In response, Shaw filed additional documentation in support of its claim that

the 2003 Master Agreement is binding on HKA Enterprises and Shaw. It offered

business filing documents from the South Carolina Secretary of State showing that

HKA Enterprises was incorporated on July 30, 2002; HKA Power was formed on

September 6, 2002, and that HKA Power merged into HKA Enterprises on July 20,
2005, dissolving HKA Power as of that date. It also offered the deposition

testimony of Mr. Allison, the vice- president of Shaw' s risk management

department during the pertinent time period. According to Shaw, Mr. Allison' s

testimony did not create a genuine issue of material fact as to whether HKA

Enterprises breached the 2003 Master Agreement.

In his deposition, Mr. Allison acknowledged that among his duties for Shaw

was to ensure that the entities with whom Shaw contracted were insured and that

Shaw' s subcontractors met Shaw' s insurance standards. He stated that every

contract of $500, 000.00 or more had to be approved by Risk Management before it

was signed, and that he was involved in Shaw' s acquisition of EDS, which at the

time was part of Duke Energy. Shaw purchased the stock of EDS, and while Mr.

Allison could not recall the specific date of the purchase, he indicated that it was

E

around November 21, 2003. On January 12, 2004, EDS changed the name of the

corporation to Shaw/EDS.

Mr. Allison stated that following Shaw' s purchase of EDS, Shaw requested

the subcontracts EDS had and the insurance certificates associated with those

subcontracts to make sure that all insurance certificates were in compliance with

Article 8. 5 of the 2003 Master Agreement. He also stated that each time the

insurance was set to expire on that existing certificate, Shaw would have requested

a new insurance certificate. Mr. Allison stated that EDS had original documents at

its North Carolina office, and sent him electronic files, for which he created a file

under Shaw' s Power Division; however, Mr. Allison did not know what happened

to these documents. He assumed that all of the documents Shaw had pertaining to

Shaw' s acquisition of EDS in what he recollected as 2003 were transferred to Pike
4
Electric, which purchased Shaw/ EDS in 2008.

Mr. Allison noted that he reviewed documents in connection with the

underlying personal injury claim, the petition, and the 2003 Master Agreement. He

stated that other than the 2003 Master Agreement, he was unaware of any other

EDS/ HKA documents. Mr. Allison acknowledged that Mr. Beasley' s payment

history indicated that he was an employee of HKA Enterprises. Mr. Allison

admitted that he was unaware of any contract having been executed between

Shaw/EDS and HKA Enterprises.

During the deposition, Mr. Allison' s attention was directed to Article 16. 3 of

the 2003 Master Agreement, which states that HKA Power shall not assign this

agreement or subcontract any of its obligation under the agreement without the

prior written consent of EDS. Mr. Allison acknowledged that if there was a

written consent from EDS to HKA Power or HKA Enterprises authorizing an

assignment of the 2003 Master Agreement, Shaw' s legal department would have

such a document. He admitted that if such a consent existed, he would not have

seen it and he knew nothing about the continuing relationship between Shaw/EDS

and HKA Enterprises. However, he did offer his opinion that the 2003 Master

Agreement was in effect on the date of the accident, and stated that he had no

reason to believe that contract would not have been in effect based on his record

search and investigation.

Mr. Allison was asked a series of questions regarding whether he was aware

of the existence of any written documents required by various provisions of the

2003 Master Agreement, including work orders, purchase orders, and written

authorization for Mr. Beasley to operate the vehicle involved in the accident. Mr.

Allison was unable to say if any such documents existed, but added if they existed,

the documents would be in the possession of Pike Electric.

Attached to Mr. Allison' s deposition is a document showing that EDS

amended its articles of incorporation to change its name to Shaw Energy Delivery

Services, Inc. on January 12, 2004. The document states that the amendment was

adopted by EDS' sole shareholder and that the amendment did not provide for an

exchange, reclassification, or cancellation of issued shares.

HKA Enterprises filed a supplemental memorandum focusing on Mr.

Allison' s admissions that he did not know if EDS issued a purchase order

pertaining specifically to Mr. Beasley or ever authorized in writing the operation

by Mr. Beasley of any Shaw or EDS vehicle. According to HKA Enterprises, Mr.

Allison' s testimony highlights issues of fact as to whether EDS ever provided

written documentation required by the contract to HKA Power. HKA Enterprises

also pointed to Mr. Allison' s acknowledgment that when Shaw acquired EDS, it

would have looked to verify that insurance was in existence as specified in the

11

contract as creating an issue of fact as to whether HKA Enterprises breached the

2003 Master Agreement.

On June 10, 2014, following a hearing, the trial court signed a judgment

granting Shaw' s motion in part and denying it in part. The trial court ruled that

HKA Enterprises owed Shaw a defense and indemnity obligation with respect to

the claims asserted by Mr. Parker and that HKA Enterprises breached the 2003

Master Agreement for failing to maintain insurance coverage and failing to add

Shaw/EDS as an additional insured as required by that agreement. Shaw' s motion

for a defense and indemnity from HKA Enterprises for the claims asserted by Mr.

Gumpert was denied. HKA Enterprises' applications for supervisory writs to

review the grant of summary judgment were denied by this court and the Louisiana

Supreme Court.

Thereafter, on January 21, 2015, Shaw filed another motion for partial

summary judgment, asking the court to set the damages HKA Enterprises owed in

defense costs from the date the lawsuit was filed on October 10, 2006, through

November 30, 2014, as well as damages for breach of contract. Specifically, Shaw

sought to recover $ 79, 025. 82 it claimed was incurred in attorney' s fees and costs in

connection with defending itself in the underlying lawsuit and in pursuing its third

party demand. Shaw also sought to recover $ 65, 000. 00, the amount Shaw paid to

Mr. Gumpert to settle his personal injury claim, for HKA Enterprises' breach of

the 2003 Master Agreement.

In support of its second motion, Shaw relied on the 2003 Master

Agreement' s indemnity provision to recoup attorney' s fees and costs it incurred in

defending the underlying litigation from HKA Enterprises. Shaw also relied on

Article 16. 4 of the 2003 Master Agreement in support of its claim that it was

entitled to recoup attorney' s fees and costs incurred in connection with the third

12

party demand Shaw filed to enforce HKA Enterprises' obligations under that

agreement. Article 16. 4 of the 2003 Master Agreement states that "[ i] f the

enforcement of the obligations of [ HKA Power] hereunder are referred to any

attorney by EDS, then [ HKA Power] agrees to pay EDS' s reasonable attorneys'

fees and court costs in addition to any other relief which may be obtained."

In further support of the motion, Shaw also offered the affidavit of its

attorney, Brett Tweedel, who attested that he charged $ 150. 00 per hour for legal

work performed in the case and that his firm billed $ 79, 025. 82 in expenses as of

November 30, 2014. Shaw also offered documents detailing costs incurred in

connection with this matter from May 16, 2014, through October 28, 2014 in the

amount of $20, 010. 82, and an itemized, detailed account of the work performed by

its attorneys from October 25, 2006, through November 26, 2014, in the amount of

591015. 00.

In opposition to Shaw' s motion, HKA Enterprises asserted that since Shaw' s

previous motion for partial summary judgment was granted, HKA Enterprises

discovered significant new evidence held by Pike Electric, which purchased EDS

from Shaw in 2008. HKA Enterprises offered a " Master Employee Services and

Staffing Agreement" ( sometimes referred to as the " 2008 Agreement") executed

by HKA Enterprises and The Shaw Group, Inc. on February 12, 2008. HKA

Enterprises insisted that the 2008 Agreement, executed four years before it was

added as a party to this litigation, is the contract defining the rights and obligations

of HKA Enterprises and Shaw in this case. HKA Enterprises pointed out that the

2008 Agreement specifically states that it supersedes any work agreement executed

by and between Shaw and HKA Enterprises relating to the work or services to be

performed by HKA Enterprises with Shaw, and that the 2008 Agreement has a

significantly different indemnity provision than the 2003 Master Agreement.

13

According to HKA Enterprises, under the wording of the 2008 Agreement' s

indemnity provision, it would not owe indemnity and defense costs because there

are facts suggesting Mr. Beasley was driving a Shaw vehicle at the time of the

accident. HKA Enterprises also urged that Shaw' s attempt to collect defense costs

and indemnity before there had been a judicial determination that Shaw is liable to

the plaintiffs in the underlying lawsuit is premature. HKA Enterprises offered the

affidavit of Mr. Davis, who attested that he signed the 2008 Agreement as the

authorized representative for HKA Enterprises.

On April 1, 2015, the trial court signed a judgment granting Shaw' s motion

for partial summary judgment on its breach of contract claim, awarding Shaw

damages in the amount of $65, 000. 00. The court also granted Shaw' s motion for

partial summary judgment with respect to attorney' s fees and costs owed by HKA

Enterprises, but ruled that the exact amount owed for the period of October 10,

2006 through November 30, 2014, would be determined at a later date.

On July 20, 2015, Shaw filed a motion to set attorney' s fees and costs owed

by HKA Enterprises, to amend the April 1, 2015 judgment to reflect the exact

amount of attorney' s fees and costs, and to designate the June 10, 2014, and the

April 1, 2015, judgments as final judgments. In opposition to the motion, HKA

Enterprises insisted that it should not be held liable for any costs or attorney' s fees

incurred prior to February 2, 2012, the date on which HKA Enterprises was

notified of this lawsuit. Additionally, HKA Enterprises insisted that Shaw is not

entitled to recover attorney' s fees incurred in prosecuting the third party demand,

citing Article 13. 6 of the 2003 Master Agreement, which governs the arbitration

process, and provides that the losing party in an arbitration or court proceeding in

aid of an arbitration process must reimburse the other party for reasonable costs,

14

expenses, and charges incurred by the prevailing party, provided, however, that

each party shall bear its own attorney' s fees and expenses.

In reply, Shaw posited that HKA Enterprises' opposition failed to address

the reasonableness of its attorney' s fee demand. It further pointed out that in the

eight months that had passed since the trial court left open a determination of the

exact amount owed by HKA Enterprises in order to allow HKA Enterprises an

opportunity to traverse the reasonableness of Shaw' s attorney' s fees and costs,

HKA Enterprises did absolutely nothing. As a consequence, Shaw argued, it must

be assumed that HKA Enterprises did not object to the amount of the attorney' s

fees and costs incurred by Shaw and instead agreed that those amounts are

reasonable.

On November 18, 2015, the trial court signed a judgment granting Shaw' s

motion to set attorney' s fees and costs and amending the April 1, 2015 judgment to

award Shaw $ 79,025. 25 in attorney' s fees and costs, plus interest, from October

101 2006, through November 30, 2014. The court further granted Shaw' s motion

to designate the June 10, 2014, and the April 1, 2015 judgments as final judgments.

On December 23, 2015, the parties filed a joint motion to dismiss Mr.

Parker' s claims against Shaw with prejudice, which was granted by the trial court

on January 4, 2016. Mr. Parker also dismissed his lawsuit with respect to HKA

Enterprises.

Thereafter, HKA Enterprises filed an appeal contesting the June 10, 2014,

April 1, 2015, and November 18, 2015 judgments. This court dismissed the

appeal, finding that none of the three judgments rendered by the trial court were

final appealable judgments. Parker v. Zurich, supra. The matter was remanded

to the trial court for further proceedings.

15

Following remand, on August 16, 2017, Shaw filed a motion for summary

judgment seeking to recover attorney' s fees and costs from December 1, 2014,

through the present day in the amount of $30, 334. 59 and the $ 33, 100. 00 payment

made to Mr. Parker to settle his personal injury lawsuit, in addition to the amounts

previously awarded by the trial court in the earlier judgments. In support of the

motion, Shaw attached the following documents to its memorandum: ( 1) the 2003

Master Agreement; ( 2) the affidavit of Mark Walling, the corporate risk manager

for Chicago Bridge and Iron, which acquired The Shaw Group on February 13,
2013, attesting that on December 14, 2015, Mr. Parker was paid $ 33, 100. 00 on

behalf of Shaw and Chicago Bridge and Iron in full and final settlement of all

claims against them; and ( 3) the affidavit of Brett Tweedel, Shaw' s attorney, who

attested that he charged $ 150. 00 per hour for legal work performed in this matter

and that his firm billed $ 30, 334. 59 in expenses as of November 30, 2014; and ( 4) a

detailed fee schedule and itemization of attorney' s fees incurred by Shaw from

December 2, 2014, through July 28, 2017, in the amount of $28, 903. 50, as well as

a detailed statement of costs incurred in this matter from December 9, 20149

through August 2, 2017, in the amount of $1, 401. 09. Shaw maintained that as with

its previous motions for summary judgment, there is no genuine issue of material

fact in dispute and Shaw is entitled to summary judgment on all claims asserted in

the third party demand.

In opposition to the motion, HKA Enterprises argued that Shaw could not

establish that the 2003 Master Agreement applied to HKA Enterprises because it

was not a party to that agreement. It argued that Shaw was not entitled to summary

judgment on any of its claims because: ( 1) there is no privity of contract between

Shaw and HKA Enterprises as the 2003 Master Agreement was executed between

EDS and HKA Power and neither Shaw nor HKA Enterprises were parties to that

16

agreement; ( 2)
Shaw failed to produce any evidence showing that HKA Power

assigned the 2003 Master Agreement to HKA Enterprises before the subject

accident; ( 3) even if the 2003 Master Agreement applies in this case, Shaw' s claim

is barred by the doctrine of laches and estoppel; ( 4) there are material issues of fact

as to whether Shaw complied with the requirements of the 2003 Master

Agreement, referencing the absence of a work order from EDS to HKA Enterprises

or Mr. Beasley to perform services for EDS and the absence of a written agreement

giving Mr. Beasley authority to operate a Shaw vehicle as required by various

sections of the 2003 Master Agreement; ( 5) even if Shaw is entitled to indemnity,

the court must determine if the attorney' s fees being sought are reasonable; and ( 6)

the attorney' s fees sought by Shaw are not recoverable because Shaw did not

submit proof that the bills had in fact been paid.

In support of its opposition, HKA Enterprises attached the following

documents thereto: ( 1) Shaw' s responses to HKA Enterprises' third set of

interrogatories in which Shaw acknowledged that it acquired EDS on or about

November 21, 2003; ( 2) Shaw' s responses to HKA Enterprises' request for

production of documents, admitting that it was unable to locate any documents

titled " Purchase Order" or " Work Order" and that Shaw was unable to locate any

responsive documents authorizing Mr. Beasley to operate the vehicle in which the

October 12, 2005 accident occurred, given the fact that Shaw/EDS was sold in

2008 and all records relating to Shaw/ EDS were transferred to the new owner,

along with other documents containing employment related references to Beasley

and Shaw accident reports; ( 3) various documents submitted by Shaw to HKA

Enterprises supplementing its response to requests for production of documents

showing that HKA Enterprises billed EDS for Mr. Beasley' s services on October

191 2005 for the period ending October 5, 2005, along with a Shaw/EDS

17

disbursement voucher paying that invoice; ( 4) the affidavit of Mr. Davis relative to

the 2008 Agreement and HKA Enterprises' lack of knowledge or notice regarding

the October 12, 2005 accident involving Mr. Beasley, and ( 5) the 2008 Agreement

executed by HKA Enterprises and The Shaw Group, Inc.

On December 20, 2017, the trial court signed a judgment granting Shaw' s

motion for summary judgment with respect to all claims asserted by Shaw in the

third party demand. The judgment decreed that HKA Enterprises owed Shaw

damages in the following amounts: ( 1) $ 79, 025. 25 plus interest for attorney' s fees

and costs incurred from October 10, 2006 through November 30, 2014; ( 2)

30,334. 59 plus interest for attorney' s fees and costs incurred since December 1,

2014; ( 3) $ 33, 100. 00 plus interest for the settlement payment to Mr. Parker; and

4) $ 65, 000. 00 plus interest for all breach of contract claims asserted in the third

party demand.

HKA Enterprises filed a motion for a new trial on the merits and to correct

deficiencies in the December 20, 2017 judgment with respect to the decretal

language. The trial court denied the motion on the merits, but granted the motion

to amend the judgment' s decretal language and the calculation of interest. In a

judgment signed by the trial court on April 12, 2018, the court awarded the same

sums identified above, but expanded the language to decree the dates on which

judicial interest would run on the individual awards and to make clear that the

65, 000. 00 breach of contract damage award was for HKA Enterprises' failure to

add Shaw as additional insured under its policies of insurance.'

HKA Enterprises appealed, asserting that the trial court erred in granting

summary judgment on Shaw' s claims for defense, indemnity, and attorney' s fees.

The trial court designated the judgment as a final judgment that is immediately appealable.
Because the judgment disposed of all claims asserted by Shaw in the third party demand, and the
underlying lawsuit was settled and dismissed, there was no need for the trial court to designate
the judgment as final in order for it to be an appealable judgment.
18

Specifically, HKA Enterprises challenges the use of the summary procedure and
the trial court' s rulings in: ( 1) granting contractual indemnity under the 2003

Master Agreement when neither Shaw nor HKA Enterprises were in privity of
contract; ( 2) finding Shaw proved that EDS gave its prior written approval to HKA

Power to assign the 2003 Master Agreement to HKA Enterprises; ( 3) ruling that

the subsequent 2008 Agreement between Shaw and HKA Enterprises was not a

novation of the 2003 Master Agreement; ( 4) ruling that HKA Enterprises breached

the 2003 Master Agreement; ( 5) finding that Shaw had complied with its

obligations under the 2003 Master Agreement; ( 6) ruling that the defense of laches

did not bar Shaw' s claims; ( 7) awarding Shaw damages for breach of contract; and

8) awarding Shaw attorney' s fees.

DISCUSSION

A motion for summary judgment is a procedural device used to avoid a full-

scale trial when there is no genuine issue of material fact. Jones v. Anderson,

11t
2016- 1361 ( La. App. Cir. 6/ 29/ 17), 224 So. 3d 413, 417. A motion for

summary judgment shall be granted if the motion, memorandum, and supporting

documents show there is no genuine issue as to material fact and that the mover is

entitled to judgment as a matter of law. La. C. C. P. art. 966A(3).

This court reviews the evidence on the motion for summary judgment de

novo under the same criteria that govern the trial court' s determination of whether

summary judgment is appropriate. Jones, 224 So. 3d at 417. This court must ask

the same questions a trial court does in determining whether summary judgment is

appropriate: whether there is any genuine issue of material fact, and whether the

mover is entitled to judgment as a matter of law. Because it is the substantive law

that determines materiality, whether a particular fact in dispute is material must be

determined in light of the substantive law applicable to the case. Id.

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APPLICABILITY OF THE 2003 MASTER AGREEMENT

The purpose of an indemnity agreement is to allocate risk inherent in a

certain activity between the parties to the contract. McKinney v. South Central
1St
Bell Telephone Company, 590 So. 2d 1220, 1222 ( La. App. Cir. 1991), writ

denied, 592 So. 2d 1302 ( La. 1992). A contract of indemnity forms the law

between the parties and must be interpreted according to its own terms and

conditions. Id. The general rules governing the interpretation of contracts apply in

construing a contract of indemnity. Naquin v. Louisiana Power & Light

Company, 2005- 2104 ( La. App. 1 St Cir. 11/ 17/ 06), 951 So. 2d 228, 231, writ

denied, 2006- 2979 ( La. 3/ 9/ 07), 949 So. 2d 441. The determination of the parties'

intent is the foremost requirement in the interpretation and construction of a

contract. Liem v. Austin Power, Inc., 569 So. 2d 601, 608 ( La. App. 2nd Cir.

1990).
Agreements to indemnify are strictly construed and the party seeking to
enforce such an agreement bears the burden of proof. Id.

Because Shaw' s claims for indemnity, attorney' s fees, and breach of

contract damages are all based on the 2003 Master Agreement, Shaw' s initial

burden on the motion for summary judgment was to demonstrate that, as a matter

of law, the 2003 Master Agreement was a binding and enforceable contract

between Shaw and HKA Enterprises on October 12, 2005, the date of the accident

in the underlying litigation. The undisputed evidence on the motion for summary
judgment established that:

1) HKA Power and HKA Enterprises were formed as separate entities
in 2002;

2) On November 14, 2003, HKA Power and EDS executed the 2003
Master Agreement, pursuant to which, HKA Power agreed to
provide supplemental labor on an " as -needed" basis to EDS, its
subsidiaries, and other affiliated entities; the agreement was

effective for a term of 2 years;

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3) On November 21, 2003, Shaw acquired EDS by purchasing EDS'
stock;

4) When Shaw acquired EDS, EDS was a division of Duke Energy;
on January 12, 2004, EDS amended its articles of incorporation to
change its name to Shaw Energy Delivery Services;

5) On July 20, 2005, HKA Power merged into HKA Enterprises and
was dissolved as of that date; and

6) On October 12, 2005, Mr. Beasley was a HKA Enterprises
employee who was
driving a Shaw/EDS vehicle with the
permission of Shaw/EDS when the accident occurred.

HKA Power and EDS were the parties who executed the 2003 Master

Agreement. Prior to the accident, HKA Power had been dissolved when it merged

with HKA Enterprises, and EDS had been purchased by Shaw. Because neither

HKA Power nor EDS was in existence at the time of the underlying accident, Shaw

was required to prove at a minimum that the 2003 Master Agreement imposed

indemnity and insurance obligations on HKA Power' s successor, HKA

Enterprises. Although the ultimate issue of whether Shaw, a non-party to the
original contract, can enforce the contract against HKA Enterprises, also a non-

party to the contract, may involve a question of law', there are a number of factual

determinations which must be made to resolve this issue. Crucial to this

determination is the relationship between the parties to the 2003 Master

Agreement, HKA Power and EDS, and the parties in this litigation, HKA

Enterprises and Shaw.

Shaw made no attempt to explain the details regarding the acquisition of

HKA Power by HKA Enterprises in its motion for summary judgment. Nor did

2 We note that the 2003 Master Agreement states, in Article 16. 7, that the agreement " shall be
governed by, and construed in accordance with, the laws of the State of North Carolina,
excluding any conflict of laws rules." Shaw did not establish whether HKA Enterprises was
bound by the 2003 Master Agreement under North Carolina law as a result of its merger with
HKA Power. In granting the motion for summary judgment, the trial court failed to make a
threshold determination as to whether North Carolina or Louisiana law regarding theories such
as successor liability or assignment of contracts apply in this case.
21

Shaw offer evidence showing that under the applicable law, HKA Power assigned

its contracts to HKA Enterprises. We note that there is a specific provision of the

2003 Master Agreement, Article 16. 4, which prohibits HKA Power from assigning

the agreement or any of its obligations thereunder without the written consent of

EDS; Shaw produced no evidence of such written consent.

Instead of demonstrating that HKA Enterprises assumed the contractual

indemnity and insurance obligations imposed on HKA Power, Shaw merely argued

that HKA Enterprises and Shaw continued to operate pursuant to the terms of the

2003 Master Agreement after the dissolution of the original parties to the contract.

Shaw offered no evidence to support its assertion that the parties to the 2003

Master Agreement intended for all of the terms of the 2003 Master Agreement to

apply to any subsequent entities. In short, Shaw failed to show that there were no

factual questions as to whether HKA Enterprises is bound by the specific

indemnity and insurance obligations imposed on HKA Power in the 2005 merger

of those entities.

Additionally, Shaw failed to offer sufficient details of its acquisition of EDS.

Shaw claimed that on the date of the accident, EDS was a wholly owned subsidiary

of Shaw such that indemnity agreement confected between HKA Power and EDS

would inure to Shaw' s benefit. Again, missing from the evidence in support of

Shaw' s motion is proof that EDS transferred all of its rights under the 2003 Master

Agreement to Shaw as part of Shaw' s acquisition of EDS or evidence of any
continued relationship between Shaw and EDS following the acquisition.

Moreover, HKA Power agreed to indemnify EDS and its subsidiaries and affiliated

companies from certain claims. Shaw did not offer sufficient evidence establishing

that on the date the 2003 Master Agreement was confected, Shaw was a subsidiary

22

or affiliated company of EDS, or that HKA Power agreed to indemnify any entity

which would later purchase EDS.

In light of the existence of numerous factual issues concerning the

relationships between HKA Power and HKA Enterprises, between Shaw and EDS,

and between HKA Enterprises and Shaw, and the absence of evidence defining

those relationships, we conclude that the trial court erred in ruling that the 2003

Master Agreement is binding and enforceable as to HKA Enterprises and Shaw as

a matter of law. Because the judgments appealed from are based on this erroneous

predicate ruling, we reverse the December 20, 2017 judgment granting Shaw' s

motion for summary judgment with respect to all claims asserted by Shaw in the

third party demand against HKA Enterprises and the April 12, 2018 judgment

correcting deficiencies in the December 20, 2017 judgment.

CONCLUSION

For the foregoing reasons, the December 20, 2017 and April 12, 2018

judgments are reversed. This matter is remanded to the trial court for proceedings

consistent with this opinion. All costs of this appeal are assessed to appellees,

Zurich American Insurance Company and The Shaw Group, Inc.

REVERSED AND REMANDED.

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