Branch v. Fid. & Casualty Company of N.Y.

United States Court of Appeals for the Fifth Circuit · 1986 · Evidence

783 F.2d 1289 (5th Cir. 1986)

Updated August 22, 2026

EvidenceRule 408settlement evidenceharmless errorindemnitystrict liabilitynegligenceLouisiana law

Facts

Two Platform Coating employees, Branch and Marlowe, died when a pipe handrail on Chevron's offshore platform broke after they attached scaffolding to it; the welds at both ends were badly corroded. Evidence showed Chevron had not inspected the pipe or welds during the six years before the accident and there was no indication of any inspection or repair after the platform was built in 1966, even though corrosion on gulf metal structures was well known. Before the second trial, Platform Coating and its insurers settled with the plaintiffs and a compensation intervenor under an agreement that eliminated further exposure for Platform Coating and limited enforcement of any later judgment against Chevron. At trial, the district court admitted the settlement agreement and amounts paid, and repeatedly told the jury it could consider the settlements in deciding Chevron's responsibility and damages.

Issue

Whether the district court erred by admitting the settlement agreement and commenting that the jury could use it in deciding liability and damages, and if so whether that error required reversal. The court also had to decide whether Chevron's indemnity agreement with Platform Coating covered Chevron's liability for negligence, strict liability, or both, and whether the evidence supported the jury's findings on negligence, strict liability, and contributory negligence.

Rule

Under Federal Rule of Evidence 408, evidence of a compromise is not admissible to prove liability for, invalidity of, or amount of a claim; admitting settlement evidence for those purposes is error, though the error is harmless if the complaining party suffered no actual prejudice. Under this indemnity provision, Chevron cannot obtain indemnity for its own negligence without express and specific language, but for an accident occurring before the Louisiana Oilfield Indemnity Act of 1981, general indemnity language did transfer Chevron's strict-liability exposure under Louisiana Civil Code articles 2317 and 2322. Louisiana strict-liability claims under articles 2317 and 2322 require proof that the thing or building was unreasonably dangerous for normal or foreseeable use because of a defective condition, but do not require proof of negligence.

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In a federal products-liability trial in Houston, Lena Ortiz sues Rivermark Equipment after a warehouse hoist collapses. Before trial, Lena settles with a maintenance subcontractor, and the judge tells the jury the subcontractor paid $300,000 and that the payment may be considered in deciding whether Rivermark was at fault.

Was the judge's use of the settlement evidence proper?

Explanation. Under Federal Rule of Evidence 408 as applied by the majority, evidence of a compromise is inadmissible when used to prove liability, invalidity of a claim, or the amount of a claim. Judicial comments expressly inviting the jury to use settlement amounts to assess fault are error.