Louisiana Anti-Indemnification Statute May be in Jeapardy!
Shippers, particularly the paper and chemical companies, have had substantial influence in Louisiana. One area of influence in the past has been that trucking companies must indemnify shippers from liability, even under circumstances when the shipper may be at fault.
As in many other states, Louisiana recently enacted anti-indemnity provisions. The Louisiana anti-indemnity statute is: Louisiana Revised Statute 9:2780.1, which declares null, void, and unenforceable any provision in a motor carrier transportation or construction contract that purports to indemnify, defend, or hold harmless a company against damage resulting from the negligence or intentional acts or omissions of that company.
Further, any provision in a motor carrier transportation or construction contract that purports to require a company to procure liability insurance covering the acts or omissions or both of another company is null, void, and unenforceable. In addition, Louisiana law shall govern any motor carrier transportation contract for loading or unloading that occurs in Louisiana and any construction contract to be performed in Louisiana.
The law shall not apply to prohibited clauses in any motor carrier transportation or construction contract entered into prior to January 1, 2011. Also, the new law shall not apply to a contract providing indemnity when the contract was executed before January 1, 2011, and the contract governs a specific terminable performance of a specific job or activity.
Similar to Louisiana’s new law, in March 2008, the Tennessee Legislature enacted a law that also declared void and unenforceable all provisions in a motor carrier transportation contract that purports to grant indemnity to a party against liability for damages resulting from the negligence of that party, its agents or employees against public policy. Relative to Tennessee’s law, there is one exception for indemnity provisions contained in the Uniform Intermodal Interchange and Facilities Access Agreement administered by the Intermodal Association of North America or in other agreements relating to intermodal chassis, containers or other intermodal equipment.
Depending upon the particular transaction involved and the motor carrier’s role in that transaction, the Louisiana and Tennessee statutes will either assist or hinder the motor carrier’s objectives in drafting the contract.
For example, a shipper entering into a contract governed by Louisiana or Tennessee law may no longer be able to demand indemnity against its own negligence in loading or securing cargo. Note that shippers typically demand not only indemnity, but also require the motor carrier to defend negligence actions brought against the shipper alleging such claims. It will be important to ensure that the motor carrier’s defense obligation does not exceed its indemnity obligation in drafting future contracts governed by Louisiana or Tennessee law.
Some Louisiana legislators are attempting Anti-Indemnification Repeal – Again! The LMTA reported that we will see another attempt by the Big Chemical Companies represented by the Louisiana Chemical Association (LCA) and Big Oil represented by the Mid-Continent Oil & Gas Association to repeal the anti-indemnification law passed in 2010. And, even after two losses in court, LCA is continuing its appeal claiming that the law is unconstitutional.
There are three bills filed in the 2012 Legislature that would basically repeal Act 492. The LCA lobbyists are telling legislators that they just want to “tweak” the law. As reported by the LMTA, “Nothing could be further from the truth!” The following bills are being considered:
HB 444 – Rep. Neil Abramson (D-New Orleans) – reported to the House Civil Justice committee, Rep. Abramson is the Chairman.
HB 465 – Rep. Neil Abramson (D-New Orleans) – reported to the House Commerce Committee.
SB 540 – Sen. Arthur Morrell (D-New Orleans) – reported to the Senate Transportation Committee.
According to the Louisiana Motor Transport Association, “Rep. Neil Abramson (D-New Orleans) is the primary sponsor of the repeal effort and appears to be “committee shopping”. Sen. Arthur Morrell (D-New Orleans) is their primary sponsor in the Senate. Sen. Danny Martiny (R-Metairie) is still the voice for fairness and true tort reform…and our Champion in the Senate.”
If this is an area of concern, contact your representative and note your position. In the meantime, if there is anything we can do to assist you in north Louisiana or northeast Texas, don’t hesitate to call.
Perkins & Associates, LLC
401 Market Street, Suite 900
Shreveport, LA 71101