## Facts

- Halliburton Geophysical Services, Inc. (HGS) time-chartered McCall Boat Rentals, Inc.’s vessel, the M/V JOYCE McCALL, for offshore operations.
- The time charter included mutual indemnity and defense obligations for claims brought by or on behalf of each party’s own employees.
- The charter also required insurance to support the risk allocation, but in different ways:
  - HGS had to insure the liabilities it assumed under the charter through comprehensive general liability coverage with maritime endorsements.
  - McCall had to procure Protection & Indemnity (P&I) and related liability coverage, name HGS as an additional assured, and add endorsements providing broad additional-assured coverage, deleting “as owner” limitations as to additional assureds, and providing contractual liability coverage tied to McCall’s obligations under the charter.
- Shawn Tullier, an HGS employee, slipped and fell on the vessel and sued HGS and McCall in tort.
- The tort claims were settled, and the parties then disputed which contractual/insurance obligation ultimately bore McCall’s settlement payment.

## Issues

1. Under the time charter and maritime law, must the additional-assured coverage procured by McCall for HGS respond to the employee injury claim before HGS’s contractual indemnity to McCall is triggered?
2. What effect do the charter-required P&I endorsements (broad additional-assured coverage, deletion of “as owner” limits, and contractual liability coverage) have on the priority between insurance and indemnity?

## Decision

- The Fifth Circuit reversed the district court’s judgment for McCall and remanded.
- The court held that McCall’s additional-assured insurance coverage for HGS must be exhausted before HGS’s contractual indemnity obligation to McCall applies.
- The court rejected an allocation that would require HGS to indemnify McCall without first giving effect to the bargained-for additional-assured coverage.

## Legal Principles

- When an offshore/maritime contract pairs cross-indemnity provisions with a requirement that one party name the other as an additional assured under liability policies, the additional-assured insurance is treated as primary to the indemnity obligation.
- Contract language requiring endorsements that broaden additional-assured coverage and delete “as owner” limitations supports reading the insurance obligation as first-line protection for the additional assured.
- Provisions requiring contractual liability coverage tied to charter obligations reinforce that the parties intended insurance proceeds to respond before shifting losses through contractual indemnity.

## Conclusion

The Fifth Circuit enforced the charter’s risk-allocation scheme by requiring exhaustion of McCall-procured additional-assured insurance covering HGS before HGS could be compelled to indemnify McCall for the settlement of an HGS employee’s injury claim.


Tullier v. Halliburton Geophysical Servs., Inc., 81 F.3d 552 (5th Cir. 1996)