SUSAN DURKIN LAUGELLE, individually and as personal representative of the Estate of Joseph Laugelle, Jr., deceased, and as Next Friend to Anna Grace Laugelle and Margaret Grace Laugelle, Plaintiffs,
BELL HELICOPTER TEXTRON, INC., et al., Defendants.
Submitted: March 6, 2014.
Reargument Granted: March 28, 2014.
Upon Defendants/Third-Party Plaintiffs, Bristow Group, Inc./Air Logistics, LLC's, Motion for Reargument of Third-Party Defendant Rotorcraft Leasing Company, LLC's Motion for Summary Judgment, GRANTED IN PART AND DENIED IN PART.
J. Scott Shannon, Esquire and Art C. Aranilla, Esquire, Marshall Dennehey Warner Coleman & Goggin, Wilmington, Delaware, J. Bruce McKissock, Marshall Dennehey Warner Coleman & Goggin, Philadelphia, Pennsylvania, Attorneys for Defendants/Third-Party Plaintiffs Bristow Group, Inc./Air Logistics, LLC.
Vernon R. Proctor, Esquire and Meghan A. Adams, Esquire, Proctor Heyman LLP, Wilmington, Delaware, Gregory W. Carboy, Esquire and Jacquelyn V. Clark, Esquire, Cowles & Thompson, P.C., Dallas, Texas, Attorneys for Third-Party Defendant Rotorcraft Leasing Company, LLC.
OPINION AND ORDER
Paul R. Wallace, Judge.
This action arises out of a helicopter crash that occurred on December 11, 2008, in the Gulf of Mexico, off the coast of Sabine Pass, Texas.Joseph Laugelle, Jr., the pilot of the helicopter ("Pilot"), was transporting four passengers to an off-shore oil rig when the helicopter went down about two miles offshore.
In December 2010, Plaintiff Susan Durkin Laugelle, the Pilot's wife, brought suit against the manufacturers of the helicopter, its engine, and its engine accessories, as well as a company that previously owned and maintained the helicopter, Bristow Group Inc./Air Logistics, LLC. Mrs. Laugelle alleges, in part, that some mechanical failure of the helicopter led to the fatal accident.
Third-Party Plaintiff Bristow Group, Inc./Air Logistics, LLC ("Bristow/AL") seeks to enforce protection mechanisms included within the agreement for sale of the accident helicopter between itself and Rotorcraft Leasing Company, LLC ("RLC"), specifically indemnification and defense provisions and a contractual agreement to provide insurance. RLC challenged the enforceability of these provisions claiming that Bristow/AL filed its action against RLC outside of Delaware's three-year statute of limitations, and that the contractual indemnification provision is unenforceable under Delaware law. The Court granted summary judgment in favor of RLC on its claims in an opinion dated February 27, 2014. Bristow/AL then moved for reargument which the Court granted on March 28, 2014. Upon consideration of the parties' claims on reargument, the Court grants summary judgment in favor of RLC on the claim of obligation to indemnify, and grants summary judgment in favor of Bristow/AL on the claim of breach of contract for RLC's failure to provide insurance and on RLC's obligation to defend. The Court further denies Plaintiffs' Motion in Limine to Sever the Cross-Claim between Bristow/AL and RLC.
II. Factual and Procedural Background
Third-Party Bristow/AL owned and operated various fixed and rotor wing aircraft, including small and mid-sized helicopters that were used in connection with Part 135 charter services to offshore oil and gas facilities. Third-Party Defendant RLC also owned and operated a fleet of aircraft, including small and mid-sized helicopters, which it used in connection with Part 135 air charter services to offshore oil and gas facilities. In August 2008, Bristow/AL and RLC entered into an Asset Purchase Agreement ("APA") under which Bristow/AL agreed to sell the bulk of its small and mid-sized helicopter fleet to RLC. Under Federal Aviation Administration ("FAA") requirements for such a sale, the aircraft would have to first be transferred from Bristow/AL's Part 135 Air Carrier Certificate to RLC's Certificate. Before such a transfer would be effective, the parties were required to prepare and file various documents and to obtain FAA approval of the transfer.
Given the often time-intensive nature of this process, RLC and Bristow/AL entered into a Transition Service Agreement ("TSA") pursuant to which Bristow/AL agreed to continue as the operator of the aircraft Rotorcraft acquired, but which had not yet been transferred to RLC's Part 135 Certificate. Among other provisions, the TSA required, in Section 5.03(a), that RLC provide to Bristow/AL indemnification and defense for:
[A]ny and all claims, demands, causes of action, damages, judgments, and awards of any kind or character, without limit and without regard to the cause or causes thereof, strict liability, tort, breach of contract, or the negligence of any person or persons, including that of the Indemnified Person, whether such negligence be sole, joint or concurrent, active, passive or gross, or any other theory of legal liability.
The TSA also contained an insurance obligation:
Section 6.02. Requirements.
Each of the Operator and Buyer shall maintain the following insurance and all other insurance required by applicable law for the benefit of both parties with respect to operations under this Agreement:
(d) each of the Operator and Buyer shall maintain for each Purchase Aircraft owned by it (for the duration of such ownership or until this Agreement is terminated) Aircraft Liability, Bodily Injury (including liability to passengers) and Property Damage insurance with a combined single limit of not less than U.S. $50, 000, 000 or its currency equivalent per occurrence.
Section 6.03. Policy Endorsements.
(c) the insurance required in . . . Section 6.02(c) . . . shall include all of the following:
(1) Further indemnity – the Indemnified Person shall be named as additional insured to the extent of the liabilities assumed by indemnifying party under this Agreement.
The TSA further mandated that the insuring party provide evidence of this coverage to the party to be insured:
Section 6.04. Evidence of Insurance. Before performing any of the services pursuant to this Agreement, each of the Operator and the Buyer shall provide the other Party with certificates or other documentary evidence reasonably satisfactory to the other Party of the insurance and endorsements required under this ARTICLE VI.
The closing date for the APA was October 30, 2008. Between August 2008 and November 2008, the effective dates of the APA, the purchased aircraft were gradually being transferred from Bristow/AL's part 135 Certificate to RLC's Part 135 Certificate. The accident helicopter was transferred on or about November 25, 2008. On December 11, 2008, the accident helicopter went down in the Gulf of Mexico while on a flight from Sabine Pass, Texas to an offshore oil platform. By then, the accident helicopter was operated by RLC and registered on RLC's Part 135 Certificate. Joseph Laugelle, Jr., the pilot of the accident helicopter and an RLC employee was fatally injured in the crash. The TSA terminated on April 30, 2009.
Mr. Laugelle's estate and heirs (hereinafter "Plaintiffs" or "the Laugelles") filed a wrongful death action in this Court on December 7, 2010, asserting, inter alia, claims for negligence, breach of warranty, and wrongful death against Bristow/AL. On January 20, 2011, Bristow/AL submitted a letter to RLC seeking indemnification and defense from Plaintiffs' claims. The tender of indemnification and defense was rejected by letter dated February 14, 2011-- the letter stating that Bristow/AL was not covered under any applicable aviation insurance policy.
Bristow/AL first filed a third-party action against RLC in the United States District Court for the District of Delaware on June 27, 2011. On February 14, 2012, the District Court remanded the matter to this Court for lack of subject matter jurisdiction. Bristow/AL obtained the required leave of the Court to file the present action, ultimately filing on July 22, 2012.
Following the initiation of the third-party action, Bristow/AL and RLC filed cross-motions for summary judgment. Bristow/AL sought judgment that RLC had breached the TSA's terms when it: (1) refused to defend and indemnify Bristow/AL from Plaintiffs' claims in the underlying action; and (2) failed to name Bristow/AL as additional insureds to applicable insurance coverage. RLC alleged Bristow/AL's claims should fail because: (1) the indemnification and insurance obligations were not effective after the accident aircraft was transferred to RLC's Part 135 Air Carrier Certificate; (2) the TSA had terminated by its own terms, and therefore the indemnification and insurance requirements were no longer applicable; (3) ...