Keith FONTENOT
v.
SOUTHWESTERN OFFSHORE CORPORATION and Pennzoil Exploration and Production Company.
Court of Appeal of Louisiana, Third Circuit.
*681 James P. Ryan, Jeffrey M. Bassett, Opelousas, Louisiana, Counsel for Plaintiff.
Gary P. Kraus, Mark A. Lowe, Lafayette, Louisiana, Counsel for Defendant/Appellant.
John P. Wolff, III, Baton Rouge, Louisiana, Counsel for Defendant.
Michael A. McGlone, William M. Quin, New Orleans, Louisiana, Counsel for Defendant/ Appellee.
Barry L. Domingue, Lafayette, Louisiana, Counsel for Intervenor.
(Court composed of JOHN D. SAUNDERS, JIMMIE C. PETERS, and MICHAEL G. SULLIVAN, Judges.)
SULLIVAN, Judge.
In this maritime personal injury case, the trial court granted summary judgments holding that a contract to perform drilling mud services on a jackup barge on the outer Continental Shelf was nonmaritime; therefore, the Louisiana Oilfield Indemnity Act (LOIA), La.R.S. 9:2780, invalidated its indemnity and additional insured provisions. Because we disagree with the trial court's characterization of the contract as nonmaritime, we reverse the trial court judgments as explained more fully below.
Procedural History
Keith Fontenot, a drilling mud engineer employed by A & W Louisiana, Inc. (formerly Chemrich, Inc.), filed suit under the general maritime law for injuries sustained while working aboard Southwestern Offshore Corporation's Rig # 151 in navigable waters on the outer Continental Shelf. Fontenot was working on Rig # 151 pursuant to a Master Service and Supply Agreement (MSSA) between his employer and Pennzoil Exploration and Production Company. Pennzoil had also contracted with Southwestern to supply a drilling unit and to drill the well.
Defendants, Southwestern and Pennzoil, each filed third party demands for contractual defense and indemnity against A & W Louisiana and its insurer, Indemnity Insurance Company of North America. Presented with cross motions for summary judgment on this issue, the trial court determined (1) because drilling mud services are peculiar to the oil and gas industry rather than to maritime commerce, the contract should be governed by Louisiana *682 law rather than maritime law; (2) Louisiana law did not apply as surrogate federal law under the Outer Continental Shelf Lands Act (OCSLA), at 43 U.S.C. § 1333(a)(2)(A), because the injury occurred on a vessel, which is not an OCSLA "situs;" and (3) the prohibition of indemnity for a vessel against an employer under the Longshore and Harbor Workers' Compensation Act (LHWCA), at 33 U.S.C. § 905(b), did not apply because drilling mud services were not "maritime employment" for the purposes of that act. Based upon these conclusions, the trial court granted motions for summary judgment in favor of A & W Louisiana and Indemnity Insurance Company and denied those of Pennzoil and Southwestern. Pennzoil and Southwestern have appealed.
Standard of Review
Appellate courts review summary judgments de novo, applying the same criteria used by the trial courts in deciding whether summary judgment is appropriate. Schroeder v. Board of Supervisors,
Discussion
State or Federal Law?
On November 9, 1991, Pennzoil contracted for A & W Louisiana (then Chemrich) to provide services or equipment in connection with the development or production of oil, gas, or minerals "in, on or above the navigable and/or offshore waters of the United States (including exploration and production activities on or above vessel rigs, artificial islands or fixed structures)." In this contract, Pennzoil and A & W Louisiana agreed to defend and indemnify each other for all claims brought as the result of certain enumerated risks, including those caused by the liability, fault, or negligence of the indemnitee. Included within the enumerated risks are personal injury claims brought by employees of either Pennzoil or of A & W Louisiana and its contractors and subcontractors. The agreement also required A & W Louisiana to maintain insurance naming Pennzoil and its contractors, such as Southwestern, as additional insureds.
To the extent that the MSSA requires indemnification for the indemnitee's fault, it would not be enforceable under La.R.S. 9:2780, which provides in part:
A. The legislature finds that an inequity is foisted on certain contractors and their employees by the defense or indemnity provisions, either or both, contained in some agreements pertaining to wells for oil, gas, or water, or drilling for minerals which occur in a 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 who is directly responsible to the indemnitee.
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."
The agreement, however, would be enforceable under maritime law, provided that "indemnification for an indemnitee's own negligence be clearly and unequivocally expressed." Theriot v. Bay Drilling Corp.,
*683 In Davis & Sons, Inc. v. Gulf Oil Corp.,
Determination of the nature of a contract depends in part on historical treatment in the jurisprudence and in part on a fact-specific inquiry. We consider six factors in characterizing the contract: 1) what does the specific work order in effect at the time of the injury provide? 2) what work did the crew assigned under the work order actually do? 3) was the crew assigned to work aboard a vessel in navigable waters; 4) to what extent did the work being done relate to the mission of the vessel? 5) what was the principal work of the injured worker? 6) what work was the injured worker actually doing at the time of injury?
In granting A & W Louisiana's and Indemnity Insurance Company's motions for summary judgment, the trial court relied on Thurmond v. Delta Well Surveyors,
Although Thurmond was decided before the Davis & Sons factors were formulated, the fifth circuit later reached a similar result in Domingue v. Ocean Drilling & Exploration Co.,
In this appeal, Pennzoil and Southwestern argue that the trial court misapplied the Davis & Sons factors, in particular the fourth factor, which requires considering how the work contemplated by the contract relates to the mission of the vessel. They cite the line of cases based on the finding in Theriot,
Theriot did consider as important the contractual requirement of providing a drilling vessel, but the fifth circuit had previously held that a contract to supply casing services on a drilling barge was maritime. See Corbitt v. Diamond M. Drilling Co.,
Campbell was a member of a casing crew which, using the OFFSHORE TAURUS's equipment-for example, the *684 vessel's derrick and draw works-to accomplish their task, was contracted to travel upon the OFFSHORE TAURUS and perform their work from the vessel, the mission of which was to drill oil and gas wells over navigable waters. In other words, the work performed by Campbell and the rest of Frank's [casing] crew was "inextricably intertwined with maritime activities since it required the use of a vessel and its crew." Davis,919 F.2d at 317 ; see also McDermott Intern., Inc. v. Wilander,498 U.S. 337 , 354-357,111 S.Ct. 807 , 817-18,112 L.Ed.2d 866 (1991) (work of a paint foreman contributes to the function of a paint boat and the accomplishment of its mission); Offshore Co. [v. Robison], 266 F.2d [769] at 779 (the work of a roustabout contributes to the mission of a submersible drilling barge).
Campbell,
Although the court in Domingue expressed concern that the "situs" of the injury or work on a vessel would be the controlling factor in determining whether or not a contract was maritime, subsequent jurisprudence has revealed otherwise. In Viator v. Halliburton Co.,
In the present case, the plaintiff had been assigned to work as a drilling mud engineer aboard Southwestern's Rig # 151 for over one year. He performed his services on the vessel in its "mud room," which is where he alleges to have been injured. Although we are illequipped to analyze whether drilling mud services are more akin to wireline work or to casing services-as the parties suggest we do-we can conclude from the record that Southwestern's Rig # 151 could not perform its mission of drilling a well without the plaintiffs work. While drilling mud work may be peculiar to the oil and gas industry, when performed on a special-purpose vessel, it becomes "inextricably intertwined" with the vessel's mission. Campbell,
Theriot's holding (upon which Campbell is based) has been questioned, see Lewis v. Glendel Drilling Co.,
State Law as Surrogate Federal Law
A & W Louisiana and Indemnity Insurance Company also argue that the LOIA applies as surrogate federal law under the OCSLA, at 43 U.S.C. § 1333(a)(2)(A), because the accident occurred on an OCSLA "situs"-a drilling barge that is "jacked up" out of the water. In Union Texas Petroleum Corp., v. PLT Engineering, Inc.,
(1) The controversy must arise on a situs covered by OCSLA (i.e. the subsoil, seabed, or artificial structures permanently or temporarily attached thereto).
(2) Federal maritime law must not apply of its own force. (3) The state law must not be inconsistent with Federal law.
Concerning the second requirement of the above test, there is "no difference between deciding whether a contract is maritime and whether maritime law applies of its own force." Diamond Offshore Co.,
Additionally, A & W Louisiana and Indemnity Insurance Company have not cited any cases holding that a jackup barge is an OCSLA situs. Brennan,
Indemnity under the LHWCA
A & W Louisiana and Indemnity Insurance also argue that the LHWCA, at 33 U.S.C. § 905(b) and (c), prohibits enforcement of the indemnity provisions in the MSSA because they are not "reciprocal." The trial court found the LHWCA inapplicable because Mr. Fontenot's work was not "maritime employment." However, the trial court failed to consider the LHWCA's application through the OCSLA, at 43 U.S.C. § 1333(b), to operations for the exploration, development, removal, or transportation of natural resources on the outer Continental Shelf. In the present case, Mr. Fontenot was injured aboard a vessel in navigable waters on the outer Continental Shelf, and his injury would not have occurred had he not been working in mineral operations on the shelf. Accordingly, *686 he should have been covered by the LHWCA (through the OCSLA), and the record indicates that he has in fact been receiving benefits pursuant to the LHWCA. (Mr. Fontenot has not alleged that he was a member of the crew of Southwestern's Rig # 151, which would have precluded application of the LHWCA.)
Section 905(b) (emphasis added) of the LHWCA provides in part that:
In the event of injury to a person covered under this chapter caused by the negligence of a vessel, then such person ... may bring an action against such vessel as a third party ... and the employer shall not be liable to the vessel for such damages directly or indirectly and any agreements or warranties to the contrary shall be void.
Section 905(c) (emphasis added), however, creates an exception to the above rule:
Nothing contained in subsection (b) of this section shall preclude the enforcement according to its terms of any reciprocal indemnity provision whereby the employer of a person entitled to receive benefits under this chapter by virtue of section 1333 of Title 43 and the vessel agree to defend and indemnify the other for the cost defense and loss or liability for damages arising out of or resulting from death or bodily injury to their employees.
In Campbell,
The plain language of section 905(c) requires reciprocity between vessels and employers wishing to enter agreements to indemnify, not privity. Although Sonat [the vessel] may not have agreed to directly indemnify Frank's [the employer] pursuant to the UTP-Frank's agreement, it did agree to do so pursuant to the drilling contract entered into by Sonat and UTP [the oil company]....
In sum, Sonat and Frank's were brought together by UTP solely for the purpose of carrying out UTP's oil-drilling operation. In contracting with UTP, Frank's and Sonat explicitly agreed to indemnify each other, and these agreements are unambiguous and completely reciprocal.
Id. at 1125 (footnote omitted).
In the MSSA with Pennzoil, A & W Louisiana (then Chemrich) agreed to indemnify the "COMPANY GROUP," which was defined to include Pennzoil's contractors and subcontractors. Thus, A & W Louisiana agreed to indemnify Southwestern as a contractor of Pennzoil. In its drilling contract with Pennzoil, however, Southwestern agreed to indemnify the "COMPANY," which was defined for indemnity purposes as:
Pennzoil Exploration and Production Company, its parent, and any subsidiaries and affiliated companies, non-operating interest owners associated therewith, non-operating co-owners of leases and mineral interests and non-operating participants with any of such companies in joint operating agreements. "COMPANY" shall not mean contractors of COMPANY (other than CONTRACTOR) supplying goods and services in connection with COMPANY's operations.
(Emphasis added.) As Southwestern did not agree to indemnify Pennzoil's contractors in its drilling contract and Southwestern was not a party to the MSSA with Pennzoil, we cannot conclude that the employer, A & W Louisiana, and the vessel, Southwestern, agreed to "defend and indemnify the other" as required by § 905(c). Although an indemnity obligation *687 flows from A & W Louisiana to Southwestern in the MSSA, a reciprocal obligation does not flow from Southwestern to A & W Louisiana under the drilling contract. The absence of this reciprocity precludes application of § 905(c); therefore, the indemnity provision in the MSSA, as between Southwestern and A & W Louisiana, is void under § 905(b).
Unlike the LOIA, however, the LHWCA does not invalidate an additional insured clause as "a proscribed form of indirect liability." LeBlanc v. Global Marine Drilling Co.,
If Pennzoil can be considered a "vessel" as the "charterer" of Rig # 151, see Lewis v. Keyes 303, Inc.,
A & W Louisiana contends that the indemnity obligations that it and Pennzoil assumed in the MSSA are not "reciprocal" because they differ concerning property damage, liens, and wreckage, etc. However, under the personal injury clause in the MSSA, A & W Louisiana and Pennzoil clearly agreed to indemnify each other. Although A & W Louisiana's obligation extends to suits by its contractors and subcontractors whereas Pennzoil's only covers its employees, we do not find this distinction material, as the indemnity flows in both directions. Even if the indemnity provisions were invalid under § 905(b), for the reasons discussed above, the additional insured provision would survive. Additionally, because the language of the indemnity agreement unequivocally contemplates indemnification for the indemnitee's own negligence, we find that it would be enforceable under maritime law. See Theriot,
Decree
For the above reasons, the summary judgments rendered in favor of Indemnity Insurance Company and A & W Louisiana are reversed. Judgment is hereby rendered granting Pennzoil's motion for summary judgment in its entirety and granting Southwestern's motion for summary judgment as explained above. The case is remanded for further proceedings consistent with this opinion, and costs of this appeal are assessed to A & W Louisiana and Indemnity Insurance Company.
REVERSED AND REMANDED.