QBE Syndicate 1036 v. Compass Minerals, No. 23-30076 (5th Cir. 2023)
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Defendant Compass Minerals Louisiana, Inc. (“Compass”) is part of a mineral company that owns and operates multiple salt mines. Among Compass’s locations is its Cote Blanche salt mine. Compass contracted with Louisiana-based companies Fire & Safety Specialists, Inc. (“FSS”) and MC Electric, LLC (“MCE”). An electrician employed by MCE died in an accident at the Cote Blanche salt mine. Both FSS and MCE held a commercial general liability policy with QBE. QBE filed a declaratory action in federal court, asserting that the indemnification and additional-insured provisions in the FSS and MCE purchase orders are “null, void, and unenforceable” under the Louisiana Oilfield Anti-Indemnity Act (“LOAIA”). The court rejected QBE’s argument that Compass “drills for” salt by using the drill-and-blast method for breaking a salt wall. It concluded, relatedly, that the term “drilling for minerals” in the LOAIA “should be construed as referring to the drilling of a well.” QBE appealed.
Finding no clear and controlling precedent on this issue of Louisiana law, the Fifth Circuit certified two questions to the Louisiana Supreme Court:
1. Does the Louisiana Oilfield Anti-Indemnity Act, La. Stat. Ann. Section 9:2780, apply to provisions in agreements that pertain to “drilling for minerals,” even where the agreement does not “pertain to a well”?
2. If the Act applies to agreements that pertain to “drilling for minerals,” irrespective of the agreement’s nexus to a well, does the Act apply to invalidate these indemnification and additional-insured provisions contained in contracts for fire suppression and electrical work in a salt mine, by virtue of the salt mine’s use of a “drill-and-blast” method for mining salt?
The court issued a subsequent related opinion or order on March 18, 2024.
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