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In re Complaint of Larry Doiron, Inc.

United States Court of Appeals, Fifth Circuit

January 8, 2018

In the Matter of the Complaint of Larry Doiron, Incorporated as Owner and Operator of the Barge Pogo and M/V Billy Joe for Exoneration from or Limitation of Liability
v.
SPECIALTY RENTAL TOOLS & SUPPLY, L.L.P.; OIL STATES ENERGY SERVICES, L.L.C.; ZURICH AMERICAN INSURANCE COMPANY, Defendants-Appellants. LARRY DOIRON, INCORPORATED, Plaintiff-Appellee ROBERT JACKSON, Intervenor Plaintiff-Appellee

         Appeal from the United States District Court for the Western District of Louisiana

          Before STEWART, Chief Judge, and JOLLY [*] , DAVIS [**] , JONES, SMITH, DENNIS, CLEMENT, PRADO, OWEN, ELROD, SOUTHWICK, HAYNES, GRAVES, HIGGINSON and COSTA, Circuit Judges. [***]

          W. EUGENE DAVIS, CIRCUIT JUDGE.

         We took this case en banc to consider modifying the criteria set forth in Davis & Sons, Inc. v. Gulf Oil Corp. for determining whether a contract for performance of specialty services to facilitate the drilling or production of oil or gas on navigable waters is maritime.[1] After briefing and argument, the Court has decided to adopt a simpler, more straightforward test consistent with the Supreme Court's decision in Norfolk Southern Railway Co. v. Kirby for making this determination.[2]

         I. BACKGROUND

         On October 12, 2005, Apache Corporation ("Apache") entered into a blanket master services contract ("MSC") with Specialty Rental Tools & Supply, L.L.P. ("STS"). The MSC included an indemnity provision running in favor of Apache and its contractors.[3] In early 2011, Apache issued an oral work order directing STS to perform "flow-back" services on a gas well in navigable waters in Louisiana in order to remove obstructions hampering the well's flow. A stationary production platform provided the only access to the gas well. The work order did not require a vessel, and neither Apache nor STS anticipated that a vessel would be necessary to perform the job.

         On February 24, 2011, STS dispatched a two-man crew to perform the work required by the work order. After an unsuccessful day of work, the STS crew determined that some heavy equipment was needed to complete the job and that a crane would be required to lift the equipment into place. Because the production platform was too small to accommodate a crane, the crew suggested to Apache that it engage a barge equipped with a crane to lift the equipment. Apache agreed and contracted with Plaintiff Larry Doiron, Inc. ("LDI"), to provide a crane barge.

         The next day, the LDI crew proceeded to the job site on the crane barge POGO and unloaded the equipment requested by the STS crew. After being unsuccessful, however, the STS crew discovered that it needed yet a different piece of equipment, so, with the aid of the crane, both crews began removing the heavy equipment previously unloaded. During this process, the LDI crane operator struck and injured one of the STS crewmembers, Peter Savoie, with the equipment.

         Anticipating a claim from Mr. Savoie, LDI filed a limitation of liability proceeding as owner of the crane barge POGO. Savoie filed a claim in the limitation proceeding. LDI, as Apache's contractor, then filed a third-party complaint against STS, seeking indemnity under the terms of the MSC.

         LDI filed a motion for summary judgment seeking a declaration that it was entitled to indemnity from STS under the MSC. STS filed a cross-motion for summary judgment seeking a determination that it owed no indemnity. The narrow issue presented was whether the MSC was a maritime contract. If so, general maritime law permitted enforcement of the indemnity provision. If not, Louisiana law controlled, and the Louisiana Oilfield Indemnity Act ("LOIA") precluded indemnity.[4] The district court concluded that maritime law applied and awarded LDI indemnity from STS. Our panel affirmed that judgment on appeal. A majority of the active judges then voted to take the case en banc.

         II. DISCUSSION

         A. Standard of Review

         We review de novo a district court's grant of summary judgment.[5]Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."[6] A genuine dispute exists if a reasonable jury could find in favor of the nonmoving party.[7] All facts and evidence are viewed in the light most favorable to the nonmovant.[8] We turn first to the existing law on maritime contracts in this circuit.

         B. Current Law

         The issue in this case is whether the Court should apply maritime law or Louisiana law to determine the validity of the indemnity provisions in the MSC. If Louisiana law applies, the indemnity agreement is void as against public policy.[9] If, on the other hand, the contract is maritime and state law does not apply, then the indemnity obligation is enforceable.[10]

         Our cases in this area have long been confusing and difficult to apply. In Thurmond v. Delta Well Surveyors, Judge Garwood stated in his concurring opinion that he was "generally in agreement with Judge Wisdom's persuasive opinion, but . . . troubled by the tension, or perhaps outright inconsistency, between many of our opinions in this area."[11] He elaborated that:

[I]t seems to me that it may be desirable to consider this issue en banc, in order that we may take a more consistent approach to the question of whether and in what circumstances activities in connection with mineral development in state territorial waters are maritime (or perhaps "maritime and local[.]")][12]

         Since 1990, we have followed the multi-factor test set forth in Davis & Sons, Inc. v. Gulf Oil Corp. ("Davis & Sons") to determine whether a contract is a maritime contract.[13] Judge Rubin, in attempting to summarize and make sense of our case law, set forth numerous guiding principles:

If . . . the contract consists of two parts, a blanket contract followed by later work orders, the two must be interpreted together in evaluating whether maritime or land law is applicable to the interpretation and enforceability of the contract's provisions. 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.[14]

         He stated further:

A contract may either contain both maritime and non-maritime obligations . . . . If separable maritime obligations are imposed . . ., these are maritime obligations that can be separately enforced in admiralty without prejudice to the rest, hence subject to maritime law.[15]
Whether the blanket agreement and work orders, read together, do or do not constitute a maritime contract depends, as does the characterization of any other contract, on the nature and character of the contract, rather than on its place of execution or performance. A contract relating to a ship in its use as such, or to commerce or navigation on navigable waters, or to transportation by sea or to maritime employment is subject to maritime law. What constitutes maritime character is not determinable by rubric. The Supreme Court has resorted to the observation that a contract is maritime if it has a genuinely salty flavor.[16]

         He concluded his synopsis by distilling these principles into the six-factor test at issue in this appeal:

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 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 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 injury?[17]

         A number of judges on this Court have since criticized this approach as confusing, particularly the six-factor, fact-intensive test.[18] In Hoda v. Rowan Cos., Judge Jones began the opinion by stating that:

This appeal requires us to sort once more through the authorities distinguishing maritime and non-maritime contracts in the offshore exploration and production industry. As is typical, the final result turns on a minute parsing of the facts. Whether this is the soundest jurisprudential approach may be doubted, inasmuch as it creates uncertainty, spawns litigation, and hinders the rational calculation of costs and risks by companies participating in this industry. Nevertheless, we are bound by the approach this court has followed for more than two decades.[19]

         Professor David W. Robertson has also pointed out some of the difficulties with the Davis & Sons test:

The six factors are too pointillistic: they have led Fifth Circuit panels down such odd lines of thought as "whether drilling mud services are more akin to wireline work [which has sometimes been viewed as quintessentially nonmaritime] or to casing services."[20]

         For a variety of reasons, most of the prongs of the Davis & Sons test are unnecessary and unduly complicate the determination of whether a contract is maritime. Judge Southwick's complex factual explication of the prongs in the panel opinion-which we consider below-demonstrates this point.[21]

         The first Davis & Sons' prong asks: What does the contract provide?[22]This is clearly an appropriate consideration in any contract case: the language of the contract. In this case, the contract consists of both the blanket MSC and the oral work order, which must be read together.[23]

         The second prong asks: What did the crew actually do?[24] Analyzing this prong required the panel to parse the precise facts related to the services performed under the contract and determine whether those services were inherently maritime. Because none of our previous case law had considered the flow-back services at issue here and whether they were inherently maritime, the panel attempted to analogize flow-back services to other services considered in previous opinions.[25] This required the panel to give a detailed description of both this case and the analogous cases, comparing flow-back services to casing, wireline, and welding services.[26] In doing so, the panel added to the many pages dedicated to similar painstaking analyses in the Federal Reporter.[27] The fact is, none of these services are inherently maritime. As discussed below, the focus should be on whether the contract calls for substantial work to be performed from a vessel.

         The third and fourth Davis & Sons prongs ask: Was the crew assigned to a vessel in navigable waters, and to what extent was the crew's work related to the mission of the vessel?[28] These facts would be relevant if we were required to decide whether the crew members were seamen but not relevant to whether the employer of the crewmembers entered into a maritime contract. The fifth prong asks: What was the principal work of the injured worker?[29] Again, this is not relevant to whether the injured worker's employer entered into a maritime contract.

         The sixth prong asks: What was the injured worker doing when injured?[30] The facts surrounding the accident are relevant to whether the worker was injured in a maritime tort, but they are immaterial in determining ...


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