Appeals court rules for insurer in salt mine defense dispute

The 5th Circuit U.S. Court of Appeals Monday reversed a ruling that would require an insurer to defend against a wrongful death suit brought by the family of an electrician who died at a Louisiana salt mine.

A three-judge appellate panel said in its published ruling in QBE Syndicate 1036 v. Compass Minerals Louisiana LLC that it was unclear whether the Louisiana Oilfield Anti-Indemnity Act applies to indemnity provisions in agreements between two subcontractors.

The panel said a federal judge in Louisiana erred when finding that the agreements did not fall under the LOAIA because the statute requires that the work “pertain to” a “well.”

On remand, the panel said the trial judge needs to determine if contracts for electrical work and fire-suppression systems would pertain to drilling for minerals and therefore fall within the LOAIA.

Compass contracted with Fire & Safety Specialists Inc. and MC Electric LLC to install an underground fire-prevention system and electrical support at the Cote Blanche salt mine. The subcontractors named Compass as an additional insured on their commercial general liability policies issued by QBE, court records show.

In August 2019, an electrician working for MC Electric died while attempting to install a new conduit, and his family sued Compass and FSS in Louisiana state court.

QBE sued MC Electric and FSS in May 2020, saying the agreements between the subcontractors fall within the LOAIA because the work done by the subcontractors was related to “drilling for minerals” and because Compass used a “drill-and-blast” method for mining salt.

QBE and Compass filed competing summary judgment motions in August 2022. The judge granted Compass’ motion in December 2022, ruling that the LOAIA does not apply to the agreements between FSS and MC Electric and therefore does not invalidate their indemnification provisions. 

Representatives for the parties did not respond to requests for comment.