Daniels v. Int'l Paper Co. - 1633 ( La. App. 2 Cir 11/03/17), 245 So. 3d 180

Rule:

La. Civ. Code Ann. art. 3537 provides the general rule that a contract is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue.

Facts:

International Paper Company (IP) and L&R Timber Co., Inc. executed a Master Wood Purchase and Service Agreement, under which L&R agreed to sell forest products to IP. The contract contained an indemnification clause which provided that the seller will indemnify the buyer from any claims, losses, demands, liens, causes of action or suits, judgments, fines, assessments, liabilities, damages and injuries arising out of the seller’s performance under the Agreement. L&R then contracted John Daniels to transport the forest products to IP’s mill in Louisiana. Daniels agreed to assume sole responsibility for unloading his trailers at all destination points. Daniels asserted that on the instructions of IP's employees, he drove his truck onto a scale, exited his truck, and then went to the scale house. As he attempted to reenter his truck, the catwalk on which he was required to walk collapsed, causing him to land on his knees and sustain injuries to his knees and lower back. Daniels filed suit against IP, arguing that the catwalk was in the care, custody, and control of IP. IP filed a third-party demand against L&R on the basis of the indemnification clause of the agreement. Applying Louisiana law, the trial court concluded that there was no indication that L&R intended to indemnify IP for its premises liability. According to the court, Daniels' injuries were the consequence of IP's performance under the Agreement, not L&R's performance. Accordingly, the trial court granted L&R's motion for summary judgment. IP appealed. 

Issue:

1. Did the trial court properly apply Louisiana law in analyzing the instant case? 
2. Did the trial court properly grant summary judgment in favor of L&R? 

Answer:

1) Yes. 2) No.

Conclusion:

The court properly applied Louisiana law to examine the indemnification provision, because Louisiana had a strong relationship to the parties and the dispute, and the agreement's unequivocal provision that the timber company would indemnify the paper company for damages caused by the paper company's own negligence included the claims made by the transporter that were based on La. Civ. Code Ann. art. 2317 and 2317.1. The court further held that a genuine issue of material fact remained regarding whether the agreement was a contract of adhesion, because it remained unresolved as to whether the timber company was at such a disadvantageous position that it called into question the timber's consent to an indemnification provision which could be unduly burdensome under the circumstances.