879 F.3d 568
5th Cir.2018Background
- Apache and STS had a blanket master services contract (MSC) with an indemnity clause; Apache issued an oral work order for STS to perform downhole "flow-back" services on a gas well accessible only from a fixed platform in navigable waters.
- STS began the work without expecting vessel involvement; after encountering a problem, STS requested a crane barge; Apache contracted LDI to provide the barge and crane.
- While using the crane to lift/remove equipment, an LDI crane operator injured an STS employee (Savoie); LDI filed a limitation proceeding and then third-partied STS for indemnity under the MSC.
- District court found the MSC maritime and enforced indemnity under general maritime law; the Fifth Circuit panel affirmed and the en banc court granted review to revisit the maritime-contract test.
- The core legal question was whether the MSC was a maritime contract (allowing maritime indemnity) or nonmaritime (bringing it under Louisiana law and LOIA, which would bar indemnity).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the MSC is a maritime contract | MSC is maritime because vessel involvement occurred and the work facilitated offshore production | MSC is nonmaritime: parties did not expect vessel use and vessel involvement was insubstantial and unanticipated | Contract is nonmaritime because vessel involvement was not a substantial, expected part of performance |
| Proper test for maritime character of oil-and-gas service contracts | Apply Davis & Sons multi-factor, fact-intensive test | Favor a simpler contract-focused test consistent with Kirby | Adopt two-prong Kirby-based test: (1) services facilitate drilling/production on navigable waters; and (2) a vessel is expected to play a substantial role |
| Whether party choice-of-law (maritime law) controls if contract nonmaritime | Choice-of-law clause should govern | LOIA/public policy prevents enforcing maritime choice-of-law for nonmaritime contracts | Choice-of-law clause not enforced when contract is nonmaritime and state public policy (LOIA) forbids indemnity |
| Evidence standard to determine vessel substantiality | Focus on specific services performed and accident facts | Focus on contract scope and parties' expectations; allow factual evidence when scope unclear | Courts may consider evidence of actual work and vessel involvement, but threshold inquiry is contract scope and expectations |
Key Cases Cited
- Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313 (5th Cir. 1990) (previous multi-factor test for maritime contracts in this circuit)
- Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14 (2004) (contract maritime if principal objective is maritime commerce; focus on contract's nature)
- Theriot v. Bay Drilling Corp., 783 F.2d 527 (5th Cir. 1986) (drilling aboard a vessel recognized as maritime activity)
- Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778 (5th Cir. 2009) (focus on contract's purpose rather than injury situs for indemnity applicability)