Opinion
Civil Action No. 01-1238 Section "N"
March 4, 2002
British-Borneo Exploration, Inc., ("British-Borneo") and Atwood Oceanics, Inc. ("Atwood Oceanics") filed motions for summary judgment, asserting that there are no disputed facts regarding their third party demands against Expro Americas, Inc. ("Expro"). Each submits that they are entitled to judgment as a matter of law holding that the Master Service Contract ("MSC") between Expro and British-Borneo for well completion equipment and services is a maritime contract, and thus the defense and indemnity provisions set forth therein are fully enforceable. Expro opposed British-Borneo's and Atwood Oceanic's motions, and then filed its own cross-motion for summary judgment, contending that the undisputed facts admit only that the MSC is a non-maritime contract and seeking dismissal of the third party demands against it. Expro argues that, as a matter of law, the provisions of Louisiana's Oilfield Indemnity Act ("LOIA") invalidate the defense, indemnity and insurance provisions set forth in the blanket MSC between itself and British- Borneo.
La. Rev. Stat. Ann. § 9:2780.
The Court, having considered the submissions of the parties and the applicable law, finds that there are disputed issues of material fact. In addition to the fact that there was no signed work order issued in this case, which would be the operative contract considered together with the blanket MSC, the parties only superficially address the multi-faceted and highly fact-specific inquiry necessary to determine whether the contract is maritime.
I. BACKGROUND
A. The Accident
Grant Roscoe ("Roscoe"), a sub sea engineer, filed suit under the Jones Act and the General Maritime Law, inter alia, for injuries sustained on April 24, 2000, while on the drilling floor of the semi-submersible drilling rig MODU ATWOOD HUNTER, which was operating offshore Louisiana. Roscoe was present on the drilling floor attempting to cover the rotary table drill hole, when his leg was struck by a 7" joint of metal pipe (casing). Plaintiff filed suit against his employer Expro, the drilling operator British-Borneo, and the owner of the semi-submersible Atwood.B. The Contract
On April 7, 1998, British-Borneo entered into a Master Service Contract ("MSC") with Expro Americas, Inc., agreeing to provide well completion equipment and services in connection with Expro's business activities, including but not limited to the drilling of exploratory and development wells. seeking and producing oil and gas, pursuant to work orders No signed work order issued in connection with services and equipment provided by Expro to the ATWOOD HUNTER. The blanket contract is not of itself complete, and calls for no specific work. The actual contract between the parties therefore consists of the blanket agreement as modified by the later work order.The MSC sets forth indemnity provisions, requiring that Expro provide British-Borneo with defense and indemnity for any claims which arise under the contract brought by Expro employees for personal injuries. Paragraph 16 of the blanket MSC sets forth relevant indemnity and hold harmless provisions, and provides in pertinent part:
16. INDEMNITIES
A. TO THE EXTENT NOT COVERED BY THE PROVISIONS OF 16D HEREOF, CONTRACTOR [EXPRO] AGREES TO PROTECT, DEFEND. INDEMNIFY AND HOLD COMPANY [BRITISH-BORNEO], ITS CO-LEASES. CO-OWNERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, INSURERS, CONTRACTOR GROUPS (AS DEFINED IN SECTION 16B HEREUNDER). SUBCONTRACTORS, AND ITS OR THEIR PARENT, SUBSIDIARY, AND AFFILIATED COMPANIES, AND ITS AND THEIR EMPLOYEES. REPRESENTATIVES, AGENTS, OFFICERS, DIRECTORS, INSURERS, CONTRACTORS, AND SUBCONTRACTORS (HEREINAFTER REFERRED TO COLLECTIVELY AS "INDEMNIFIED PARTIES") HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, AND CAUSES OF ACTION, INCLUDING ATTORNEY'S FEES AND COSTS, OF EVERY TYPE AND CHARACTER, WITHOUT LIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF, WHICH ARISE OUT OF OR ARE RELATED IN ANY WAY TO THE SUBJECT MATTER OF THIS CONTRACT AND WHICH:
* * *
(2) ARE ASSERTED BY OR ARISE IN FAVOR OF ANY OF CONTRACTOR'S [EXPRO'S] AGENTS, REPRESENTATIVES OR EMPLOYEES . . . DUE TO BODILY INJURY, SICKNESS, PERSONAL INJURY . . .;
WHETHER OR NOT CAUSED BY THE SOLE, JOINT, AND/OR CONCURRENT NEGLIGENCE OF THE INDEMNIFIED PARTIES AND/OR ANY CLAIM OF STRICT LIABILITY AND/OR THE UNSEAWORTHINESS OF THE VESSEL AND/OR ANY CAUSE WHATSOEVER, WHETHER PREDATING THIS CONTRACT OR NOT, WITH THE SOLE EXCEPTION THAT ANY INDEMNIFIED PARTY GUILTY OF WILLFUL ACTS OR OMISSIONS SHALL NOT BE ENTITLED TO INDEMNITY.
* * *
I. TO THE EXTENT . . . THAT THE LAWS OF LOUISIANA ARE APPLICABLE TO ANY PERFORMANCE, SERVICES, WORK, OR OPERATIONS CONDUCTED UNDER THE TERMS AND PROVISIONS OF THIS CONTRACT, COMPANY [BRITISH-BORNEO] AND CONTRACTOR [EXPRO] ACKNOWLEDGE AND AGREE THAT ALL WORK, SERVICES AND OPERATIONS PERFORMED BY CONTRACTOR AND ITS EMPLOYEES PURSUANT TO THIS AGREEMENT ARE ESSENTIAL TO THE ABILITY OF THE COMPANY TO GENERATE COMPANY'S GOODS, ESSENTIAL TO THE ABILITY OF THE COMPANY TO GENERATE COMPANY'S GOODS, PRODUCTS OR SERVICES, WITHOUT LIMITING THE FOREGOING, COMPANY AND CONTRACTOR AGREE THAT THE COMPANY IS RECOGNIZED AS, AND SHALL BE DEEMED, A STATUTORY EMPLOYER OF CONTRACTORS EMPLOYEE (BOTH DIRECT EMPLOYEES AND STATUTORY EMPLOYEES) FOR PURPOSES OF LA. R.S. 23:1061(A)(3), AS THE SAME MAY BE AMENDED FROM TIME TO TIME. IN FURTHER CONSIDERATION IN THE AMOUNTS TO BE RECEIVED BY CONTRACTOR AGREE PURSUANT TO THIS CONTRACT, COMPANY AND CONTRACTOR AGREE THAT CONTRACTOR SHALL BE RESPONSIBLE FOR THE PAYMENT OF ALL COMPENSATION BENEFITS PAID TO OR FOR THE BENEFIT OF CONTRACTORS EMPLOYEES. . . . CONTRACTOR STIPULATES AND AGREES THAT THE COMPANY SHALL BE NAMED AS AN ADDITIONAL INSURED UNDER ANY AND ALL WORKMEN'S COMPENSATION COVERAGE MAINTAINED BY CONTRACTOR . . . AND STIPULATES AND AGREES THAT ANY SUCH INSURER (OR THE CONTRACTOR IF SELF INSURED) SHALL WAIVE ANY AND ALL RIGHTS OF SUBROGATION, CONTRIBUTION OR INDEMNITY AGAINST COMPANY THEREUNDER.
Master Service Contract, signed April 7, 1998 [Exhibit "B" to Expro's Opposition to Motions for Summary Judgment.
Under the insuring provisions at paragraph 17 and Exhibit "B" to the MSC, Expro further agreed to name British-Borneo, its agents and contractors as additional insureds under various policies of insurance, including a policy of comprehensive liability coverage.
See Id. at ¶ 17 and Exhibit "B" to the MSC.
To the extent that the MSC requires indemnification for the indemnitee's fault, it would not be enforceable under La.R.S. 9:2780, which provides in part:
§ 2780. Certain indemnification agreements invalid
A. The legislature finds that an inequity is foisted on certain contractors and their employees by defense or indemnity provisions, either or both, contained in some agreements pertaining to wells for oil, gas, or water, or drilling minerals which occur in solid, liquid, gaseous, or other state, to the extent those provisions apply to death or bodily injury to persons. It is the intent of the legislature by this Section to declare null and void and against public policy of the state of Louisiana any provision in any agreement which requires defense and/or indemnification, for death or bodily injury to persons, where there is negligence or fault (strict liability) on the part of the indemnitee, or an agent or employee of the indemnitee, or an independent contractor directly responsible to the indeminitee.
La.R.S. 9:2780(A). Additionally, La.R.S. 9:2780(G) provides that "waivers of subrogation, additional named insured endorsements, or any other form of insurance protection which would frustrate or circumvent the prohibitions of this Section, shall be null and void and of no force and effect." Id.
Those provisions of the MSC, however, would be enforceable under maritime law, provided that indemnification for an indemnitee's own negligence is clearly and unequivocally expressed. Generally, under either federal maritime law or Louisiana jurisprudence (when the LOIA is not applicable), an indemnity agreement will be:
See Theriot v. Bay Drilling Corporation, 783 F.2d 527, 540 (5th Cir. 1986).
construed to cover all losses, damages, or liabilities which reasonably appear to have been within the contemplation of the parties, but it should not be read to impose liability for those losses or liabilities which are neither expressly within its terms nor of such a character that it can be reasonably inferred that the parties intended to include them within their indemnity language.
Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 333 (5th Cir. 1981) (applying maritime law); Amoco Production Co. v. Forest Oil Corporation, 844 F.2d 253-54 (5th Cir. 1988) (applying Louisiana law).
It is not disputed that the MSC clearly expresses the mutual intent of the parties that Expro will fully defend, indemnify and hold British-Borneo and its contractors, etc., harmless, even where the accident is solely caused by British-Borneo or its contractor's own negligence, for any claims brought by Expro employees arising from or incidental to the work performed under the MSC. It is also appears uncontroverted that the indemnity and insuring provisions of the MSC contemplate coverage of Roscoe's claims against British-Borneo and Atwood. Disputed issues of fact, however, inhere in the determination as to whether the MSC is a maritime or non-maritime contract, and that is the subject the Court's discussion below.
II. STANDARD OF REVIEW
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "The moving party for summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact." Stults v. Conoco, 76 F.3d 651, 656 (5th Cir. 1996).
If the movant meets the aforesaid burden, then "nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) ( en banc). To meet this burden, the nonmovant must "identify specific evidence in the record, and articulate the 'precise manner' in which that evidence supports its claims." Stults, 76 F.3d at 656 (citing Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.), cert. denied, 115 S.Ct. 195 (1994)).
III. DISCUSSION
At the outset, the Court notes that the substantive law determines the materiality of facts. The contract at issue contemplates one or more of the following types of work: (1) the installation of sub sea test trees; (2) the operation of sub sea test trees; (3) well-completion services; or (4) some combination of the foregoing types of work. The significant hurdle presented by factual disputes as to the work contemplated by the MSC and the work actually accomplished at the particular site is compounded by the absence of a written work order detailing the specifics of the particular job the Expro crew was hired to perform aboard the semi-submersible rig. There is no historic precedent for determining whether sub sea test tree installation and/or sub sea test tree operation constitute maritime activity.
Assuming without deciding that the activity contemplated by the contract was simply operating the sub sea test trees after installation was complete (i.e., Expro's argument), then the contract work is more closely analogous to wireline servicing, which has been historically characterized as non-maritime activity. In Domingue v. Ocean Drilling, the issue before the Fifth Circuit was a bit more complex than Expro suggests. The wireline work aboard the drilling vessel involved services to partially drilled oil and gas wells, and also gathering geophysical data relevant to production. Domingue's well-testing work was unrelated to the wireline services which were the subject of the contract, and he was not employed by either party to the contract to perform wireline services. In the absence of evidence that the vessel's equipment was in fact in any way utilized to perform the wireline services, the court concluded that the wireline services were only incidental to the vessel's mission, and thus the contract was not maritime. The Thurmond case involved wireline services and maintenance of a fixed structure or small island located within Louisiana's territorial waters. Thurmond's injury resulted from a defect in the platform and his work was only remotely related to the mission of the vessel.
See Domingue v. Ocean Drilling and Exploration Co., 923 F.2d 393 (5th Cir. 1991), cert. denied, 502 U.S. 1033, 112 S.Ct. 874 (1992) (citing Thurmond, 836 F.2d at 955-6 for the proposition that "wireline services are peculiar to the oil and gas industry and, viewed apart from the circumstances under which they are performed, are distinctly non-maritime in nature."); Hollier v. Union Texas Petroleum Corp., 972 F.2d 662, 665 (5th Cir. 1992); and Thurmond v. Delta Well Surveyors, 836 F.2d 952 (5th Cir. 1988).
923 F.3d at 394.
Id. at n. 3.
Id. at 395.
Id. at 397.
Thurmond v. Delta Well Surveyors, 836 F.3d at 955.
Id.
Assuming without deciding that the activities contemplated by the MSC were more along the lines of installation of sub sea test trees ( i.e., British Borneo's and Atwood's argument), then the contract work appears to be more analogous to casing service and well completion, which activities have historically been characterized as maritime work. In Campbell v. Smith Offshore Drilling, Inc., 979 F.2d 1115 (5th Cir. 1992), the Fifth Circuit determined that a contract to provide casing services was maritime. The operative contract in Campbell specified that the casing services were to be provided to a drilling vessel. Id. at 1120.
See Demette v. Falcon Drilling Company Inc., 2002 WL 58890 (5th Cir.) (involving a nonseaman injured while performing casing work on a drilling rig located on the Outer Continental Shelf, and holding that a contract to provide offshore drilling services which does not mention any vessel is maritime if its execution requires the use of vessels); Campbell v. Sonat Offshore Drilling, Inc., 979 F.2d 1115 (5th Cir. 1992).
The Fifth Circuit has established a two part test for determining if a contract is maritime. The first step involves examining the historical treatment of the activity contemplated by the contract in the jurisprudence. The Court previously noted the dearth of historical precedent above, in addition to the pertinent factual disputes precluding summary disposition of the third party claims. The second step in the two step inquiry for determining if a contract is maritime requires that the Court look at six factors. The six Davis factors include: (1) what does the specific work order in effect at the time of injury provide; (2) what did the crew assigned under the work order actually do; (3) whether the crew was assigned to work aboard a vessel in navigable waters; (4) to what extent did the work being done relate to the mission of that vessel; (5) what was the principal work of the injured worker; and (6) what work was the injured worker actually doing at the time of the injury. Id.
Davis Sons, Inc. v. Gulf Oil Corp., 919 F.23d 313, 315-16 (5th Cir. 1990).
Id. at 316.
In this case, no signed work order existed. Expro argues that neither its job proposal nor the MSC specifically refer to a vessel. In Davis, the Fifth Circuit explained that if an injury occurs in the performance of a separable maritime obligation, the entire contract is subject to maritime law, even if the obligation arises from an initial blanket agreement that is principally non-maritime. Judge Rubin wrote:
A contract may either contain both maritime and non-maritime obligations or, contemplate future detailed contracts having different characteristics. If the separable obligations are imposed by the supplementary contracts, or work orders, these are "maritime obligations [that] can be separately enforced [in admiralty] without prejudice to the rest," hence subject to maritime law. If, therefore, an injury occurs in the performance of a separable maritime obligation even though it is provided for by an initial maritime blanket contract, that it is principally non-maritime, the complete contract is nevertheless subject to the maritime law.Davis, 919 F.2d at 315-16.
The second factor considers the actual work of the Expro personnel at the time of the accident. In this case, the actual work being accomplished by Expro personnel on the ATWOOD HUNTER at the time of the accident is disputed. Expro submits evidence to suggest that its crew was present only to operate the semi-submersible test tree after its installation. Whereas, contrary evidence exists suggesting that, from time to time, the Expro crew assisted in well-completion. Roscoe testified in deposition that at the precise time of the accident, he was on the drilling floor, working together with the roughnecks, drillers, assistant drillers and derrickmen ( i.e., the drill crew). They had just started running the forty foot long test tree down to the BOP stack. The well was 3,600 feet deep and the crew had only put the first joint of pipe in the hole on top of the tree. The accident occurred during the stabbing operation lifting the next joint of 7" casing that would be stabbed or torqued-up into the hole. It took eight to ten hours of running casing to get the sub sea test tree all the way down to the BOP shoulder 3,600 feet below the surface of the water. Roscoe testified that he was putting the hole cover around the slips, when the driller lifted the casing that slid forward in the catwalk, struck Roscoe's left leg, and pinned his leg between the casing and the slips. Expro submits that it was not actually installing the tree, it does not install the sub sea trees, and that installation is accomplished by a third party. However, Roscoe testified that Expro's control panel on the rig floor was not monitored while they were running casing into the hole. The control panel was simply for montoring the functioning the sub sea test tree once it landed. Plaintiffs testimony was that he was part of the completion team along with Atwood and Oceaneering personnel, and they were jointly responsible for running the sub sea test tree down into the hole.
Deposition of Grant Roscoe, at p. 55.
Deposition of Grant Roscoe at pp. 73-74.
Id. at pp. 57-59.
Id. at 60, 72
See id. at 93-95. Roscoe identified the "completion team" as "being Oceaneering, Atwood and Expro" personnel. Id. at 93.
With respect to the third factor, Expro submits that its personnel were not assigned to work aboard the ATWOOD HUNTER, and that its crew was aboard for purposes of well completion work on the four Allegheny wells operated by British-Borneo. Expro's Area Manager Johannes Glansbeek attests that pursuant to the MSC and the job proposal, Expro would simply operate sub sea intervention equipment on four wells operated by British Borneo. However, the fact that Expro's crew was in fact actually aboard the ATWOOD HUNTER offshore at the time of accident indicates the competing inference, that Expro's crew was assigned to work aboard a vessel in navigable waters. Additionally, Roscoe testified that aside from his work in the shop for Expro, his work entailed going out to different jobs for different operators on different drill vessels.
See Proposal No. 55/8045/C British Borneo Horizontal Tree Intervention System [Expro Exhibit "1" to its Opposition to Motions for Summary Judgment].
A sub sea intervention system (consisting of a test tree, retainer, lubricator valve and surface tree) is a safety system used to stop the flow of hydrocarbons in a well and enables disconnect from the well at the seabed in case of drilling rig positioning problems. It is used in conjunction with floating drilling rigs to reduce the risk of hydrocarbons during various activities. See Affidavit of Johannes Glansbeek [Exhibit "2" to Expro's Opposition to Motion for Summary Judgment].
See Deposition of Grant Roscoe, at pp. 137-138.
The fourth factor considers the extent to which the work being done under the contract related to the mission of the vessel. Expro submits that when it operated the sub sea tree, the well was already completed. According to Glansbeek, the ATWOOD HUNTER served only as a work platform from which Expro operated the sub sea test tree. However, British Borneo submits countervailing evidence to the effect that the work performed was directly related to the mission of the ATWOOD HUNTER, relying on the distinction that the work actually being accomplished was sub sea tree installation, which was in furtherance of the mission of the vessel.
The fifth factor concerns Roscoe's principal work at the time of the accident. In this case, Expro submits that Roscoe's only job duties concerned operation of sub sea test trees. However, Roscoe's deposition testimony suggests that he and his crew would also perform the installation. Whether Expro's crew arrived after the well was complete may be discerned from British-Borneo's Daily Operations Report, however, without some testimony explaining the report, it is difficult to discern whether installation of the tree was actually taking place on the day of the accident (April 24, 2000).
The sixth factor concerns Roscoe's work at the time of his injury. Expro submits evidence which suggests that Roscoe was injured while attempting to aid in the installation of the riser. Citing Dupre v. Penrod Drilling Corp., 993 F.2d 474, 478 (5th Cir. 1993), Expro submits that this was not part of Roscoe's job duties, and thus should not be considered in assessing whether the contract is governed by maritime or Louisiana law. However, British-Borneo and Atwood Oceanic highlight Roscoe's deposition testimony that at the time of the accident, he was assisting the completion team running casing into the hole.
In Dupre, the employee of Minatome, a well operator, was injured when he slipped on mud discharged from a jack up rig owned by Penrod. Penrod and Minatome had entered into a contract whereby Penrod provided equipment, labor and services for Minatome's fourwells in the Vermillion Block 268. The employee sued Penrod, who filed a third party complaint against Minatome seeking indemnification under the contract. Minatome argued that the Louisiana Oildfield Indemnity Act invalidated the indemnity provisions in the contract. In determining if the contract was maritime, the Fifth Circuit refused to consider the fifth and sixth Davis factors, as the employee was injured while performing work unrelated to the contract and the fifth and sixth Davis factor require that the principal work of the injured worker be considered. Dupre, 993 F.2d at 478.
If the facts adduced at trial tend to show that it is more probable than not that the contract involved furnishing equipment for well completion services to one or more special purpose vessels, along with a crew to operate the equipment, and that the use of the vessel's equipment was necessary to execute the work order, then the contract was a maritime contract. In examining the six factors, the only undisputed fact is that the accident occurred on the drill floor of semi-submersible drilling rig. The Davis court cautioned that, in considering a contract, it is important to remember that the characterization of a contract depends on the nature of the contract rather than the place of execution or performance. Accordingly, and for all of the above and foregoing reasons,
See Demette v. Falcon Drilling Company Inc., 2002 WL 58890 (5th Cir. 2002); Campbell v. Sonat Offshore Drilling, Inc., 979 F.2d 1115, 1123 (5th Cir. 1992); Dupont v. Sandefer Oil Gas, Inc., 962 F.2d 60, 62 (5th Cir. 1992) (contract that required contractor to supply and equip vessel was maritime); Smith v. Penrod Drilling Corp., 960 F.2d 456 460 (5th Cir. 1992) (contractor's work focused on use of a jack-up vessel in workover operations was maritime); In re Elevating Boats, Inc., 2002 WL 272372 (E. D. La.) (Vance, J.) (applying the Davis factors and finding that a contract to provide a work crew to perform maintenance on an offshore well through the use of a special purpose jack-up rig is maritime in nature); Laughlin v. Falcon Operators, Inc., 2001 WL 506172 (E. D. La. 2001) (contract to furnish lift barge and its crew was maritime); Diamond Offshore Co. v. A B Builders, Inc., 75 F. Supp.2d 676 (5. D. Tex. 1999) (contract assigning a welder to repair a pollution pan on a semi-submersible drilling rig was maritime since the work was necessary to allow the vessel to accomplish its mission of exploring for oil and gas in the Gulf); and Gilbert v. Offshore Production Salvage, Inc., 1997 WL 149959 (E. D. La. 1997) (contractor's work involved use of a jack-up drilling vessel).
Davis, 919 F.2d at 316.
IT IS ORDERED that British-Borneo U.S.A., Inc's Motion for Summary Judgment regarding its third party demand is DENIED.
IT IS FURTHER ORDERED that Atwood Oceanic, Inc.'s Motion for Summary Judgment regarding its third party demand is DENIED.
IT IS FURTHER ORDERED that Expro Americas, Inc.'s Motion for Summary Judgment regarding the third-party claims against it is DENIED.