The opinion
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 22, 2008
No. 07-31019
Charles R. Fulbruge III
Clerk
GRAND ISLE SHIPYARD INC; GRAY INSURANCE COMPANY
Plaintiffs-Appellees
v.
SEACOR MARINE, LLC,
Defendant-Appellant
Appeal from the United States District Court
for the Eastern District of Louisiana
Before GARZA and DENNIS, Circuit Judges, and MILLS,* District Judge.
MILLS, District Judge:
Seacor Marine, LLC appeals the district court’s grant of summary
judgment to appellees Grand Isle Shipyard and Gray Insurance Company
(“Gray”) in the instant declaratory judgment action. We hold that the district
court erred in concluding that the Outer Continental Shelf Lands Act, 43 U.S.C.
1331, et seq. (“OCSLA”), applies to an accident involving an offshore platform
worker being transported by a vessel on the high seas. The district court
*
Chief Judge of the Northern District of Mississippi, sitting by designation.
1
therefore erred in applying the provisions of the Louisiana Oilfield Indemnity
Act, LA. REV. STAT. ANN. § 9:2780A (“LOIA”) as surrogate federal law under
OCSLA to invalidate the indemnity agreement in this case. Concluding that
general maritime law applies instead, we vacate the district court’s order
invalidating the indemnity agreement and remand for additional proceedings.
FACTS AND PROCEEDINGS BELOW
This declaratory judgment action involves an indemnity dispute between
Grand Isle and Seacor, two contractors of BP American Production Company
(“BP”). Grand Isle’s contracting duties involved the repair and maintenance of
BP’s offshore platforms, while Seacor’s duties involved the transporting of
workers for BP and its contractors. The indemnity dispute in this case arises
from an April 2005 incident in which Denny Neil, a Grand Isle employee, was
injured in a fall onboard the M/V SEA HORSE IV, a vessel owned and operated
by Seacor. At the time of the accident, the SEA HORSE IV was transporting
Neil from his work platform to the residential platform which contained his
living quarters. Deposition testimony indicated that the vessel was in close
proximity to the residential platform at the time of the accident, but it is
undisputed that neither Neil nor the SEA HORSE IV were in physical contact
with the platform when the accident occurred.
Neil filed suit against Seacor in the U.S. District Court for the Southern
District of Texas, asserting a claim for vessel negligence under § 905(b) of the
Longshore and Harbor Worker's Compensation Act (“LHWCA”). Seacor
tendered its defense and indemnity to Grand Isle; Seacor also claimed the
benefit of insurance provided by Grand Isle’s insurer Gray. On March 17, 2006,
2
Grand Isle and Gray filed suit in the U.S. District Court for the Eastern District
of Louisiana, seeking a declaratory judgment that: (1) Grand Isle is not
contractually obligated to defend and indemnify Seacor; and (2) Seacor is not
entitled to insurance coverage from Gray.
Grand Isle and Gray subsequently filed motions for summary judgment
in which they argued (1) that by virtue of OCSLA, the LOIA applies as surrogate
federal law in this case, thus invalidating the contractual indemnity provision
at issue here; and (2) that § 905(b) of the LHWCA is applicable to the case and
prohibits enforcement of the indemnity provision. Seacor filed its own cross
motion for summary judgment, maintaining that general maritime law governs
the dispute and noting that nothing in that law prohibits the indemnity
agreement at issue here. On September 26, 2007, the district court issued a
summary judgment order in which it held that Louisiana law does apply in this
case and that the LOIA bars Seacor from asserting its indemnity and insurance
claims against Grand Isle and Gray. The district court accordingly granted
Grand Isle and Gray’s motions for summary judgment, and Seacor timely
appealed the ruling to this court.
ANALYSIS
This case presents an issue of law of some significance in our maritime
jurisprudence. The primary legal issue on appeal involves whether Louisiana
state law, in particular the LOIA, applies to void the indemnity obligations
contained in the contract between BP and Grand Isle. BP included virtually
identical indemnity provisions in its contracts with Grand Isle and Seacor, and
neither party disputes that BP sought thereby to impose reciprocal indemnity
3
obligations among its contractors.1 The question in this case is, instead, whether
BP’s clear indemnity provision is nevertheless invalidated by the equally clear
provisions of the LOIA.
In enacting the LOIA, the Louisiana legislature explained that its intent
was “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.” LA. REV. STAT. ANN. § 9:2780A. The Supreme Court of Louisiana
has observed that the LOIA “arose out of a concern about the unequal
bargaining power of oil companies and contractors and was an attempt to avoid
adhesionary contracts under which contractors would have no choice but to
agree to indemnify the oil company, lest they risk losing the contract.” Fontenot
v. Chevron U.S.A., Inc., 676 So. 2d 557, 563 (La. 1996).
The parties agree that if the LOIA applies, then this law would serve to
1
Seacor seeks indemnity from Grand Isle under paragraph 14.07 of Grand
Isle’s contract with BP, which provides that:
Contractor agrees to defend, indemnify, release and hold company's
other contractors harmless in accordance with the provisions of this
Article 14 (to the extent such other Contractors execute cross
indemnification provisions substantially similar to those contained in
this section 14.07) from and against all claims, liabilities, damages,
and expenses (including without limitation attorney's fees and other
costs of defense), irrespective of insurance coverages for the
following:14.07.01(i) all injuries to, deaths, or illnesses of persons in
contracted group CG: . . . whether or not occasioned by or the result in
whole or in part of the negligence or fault, whether sole, concurrent,
joint, active, or passive, of company's other contractors or any other
entity or person or the unseaworthiness of any vessel.
4
void the indemnity provision at issue in this case. It is well settled that for
Louisiana law to apply as surrogate federal law under OCSLA, the three
conditions established by this court in Union Texas Petroleum Corp. v. PLT
Engineering, Inc., 895 F.2d 1043 (5th Cir. 1990) must be met. These three
conditions are that (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; and
(3) the state law must not be inconsistent with federal law.
We conclude that the OCSLA situs requirement is not met in this case,
and it is accordingly unnecessary to consider whether the remaining two PLT
Engineering conditions are met. Section 1333(a)(1) of OCSLA sets forth a
statutory situs requirement, as follows:
(1) The Constitution and laws and civil and political jurisdiction of
the United States are extended to the subsoil and seabed of the
outer Continental Shelf and to all artificial islands, and all
installations and other devices permanently or temporarily attached
to the seabed, which may be erected thereon for the purpose of
exploring for, developing, or producing resources therefrom, or any
such installation or other device (other than a ship or vessel) for the
purpose of transporting such resources, to the same extent as if the
outer Continental Shelf were an area of exclusive Federal
jurisdiction located within a State: Provided, however, that mineral
leases on the outer Continental Shelf shall be maintained or issued
only under the provisions of this subchapter.
In the 2002 decision of Demette v. Falcon Drilling Co., Inc., 280 F.3d 492 (5th
Cir. 2002), we comprehensively examined the scope of the § 1333(a)(1) situs
requirement for the first time, observing that:
[T]he OCSLA draws important distinctions between the two
categories of artificial islands, installations, and other devices. Each
category is defined by the purpose of the device-the former,
5
extraction of resources; the latter, transportation of resources. The
former also includes the phrase, “which may be erected [on the
OCS],” while the latter does not. Conversely, the latter contains the
phrase, “other than a ship or vessel,” while the former does not.
Demette, 280 F.3d at 497.
In accordance with these observations, we held in Demette that:
We incorporate these distinctions into the following rule:
The OCSLA applies to all of the following locations:
(1) the subsoil and seabed of the OCS;
(2) any artificial island, installation, or other device if
(a) it is permanently or temporarily attached to the seabed of the
OCS, and
(b) it has been erected on the seabed of the OCS, and
(c) its presence on the OCS is to explore for, develop, or produce
resources from the OCS;
(3) any artificial island, installation, or other device if
(a) it is permanently or temporarily attached to the seabed of the
OCS, and
(b) it is not a ship or vessel, and
(c) its presence on the OCS is to transport resources from the OCS.
Id.
Based on Demette, it is apparent that the SEA HORSE IV does not qualify
as an OCSLA situs within the meaning of § 1333(a)(1).2 That is, the vessel does
not qualify as either “the subsoil and seabed of the [OCS],” an “artificial island,”
or an “installation . . . permanently or temporarily attached to the seabed.”
2
One commentator has expressed his view that Demette gave overly broad
treatment to § 1333(a)(1), arguing that the situs provision “cannot be read to
delimit the coverage of the entire OCSLA.” David W. Robertson, The Outer
Continental Shelf Lands Act’s Provisions on Jurisdiction, Remedies, and Choice of
Law: Correcting the Fifth Circuit’s Mistakes, 38 J. Mar. L. & Com. 487, 502 (Oct.
2007). Regardless of whether this view has merit, Demette represents the law of
this circuit, and our task here is simply to apply it.
6
Indeed, as to the latter category, § 1333(a)(1) specifically excludes “a ship or
vessel” used for “transport[ing] resources from the OCS” from being a potential
OCSLA situs.
In holding that the situs requirement was met in this case, the district
court did not apply our holding in Demette, instead relying upon older authority
which we conclude, for reasons discussed below, to be factually distinguishable
from this case.3 The district court likewise did not apply the Supreme Court’s
analysis in Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207 (1986), which we
deem to be controlling in this case. In Tallentire, two platform workers were
killed in a crash on the high seas of a helicopter which had been transporting
them from the offshore drilling platform where they worked to their home base
in Louisiana. Tallentire, 477 U.S. at 209. The survivors of the workers argued
that they were entitled to damages based on the Louisiana Wrongful Death
Statute, which they asserted was applicable either by its own terms or as
surrogate federal law under OCSLA. Id.
The Supreme Court in Tallentire concluded that OCSLA did not apply in
that case, writing that:
admiralty jurisdiction is appropriately invoked here under
traditional principles because the accident occurred on the high seas
and in furtherance of an activity bearing a significant relationship
to a traditional maritime activity. See Executive Jet Aviation, Inc.
v. City of Cleveland, 409 U.S. 249, 93 S.Ct. 493, 34 L.Ed.2d 454
(1972). Although the decedents were killed while riding in a
helicopter and not a more traditional maritime conveyance, that
3
We acknowledge that the district court faced a difficult task in applying our
OCSLA jurisprudence. Indeed, we have previously “expressed our frustration with
the inconsistency of our case law” in this context. Hodgen v. Forest Oil Corp., 87
F.3d 1512, 1523 n. 8 (5th Cir. 1996)(citations omitted).
7
helicopter was engaged in a function traditionally performed by
waterborne vessels: the ferrying of passengers from an “island,”
albeit an artificial one, to the shore.
Id. at 218-19. Significantly, the Supreme Court in Tallentire rejected the notion
that the status of the decedents as platform workers should render OCSLA
applicable to what was otherwise a maritime accident:
The character of the decedents as platform workers who have a
special relationship with the shore community simply has no special
relevance to the resolution of the question of the application of
OCSLA to this case. . . . We do not interpret § 4 of OCSLA, 43 U.S.C.
§ 1333, to require or permit us to extend the coverage of the statute
to the platform workers in this case who were killed miles away
from the platform and on the high seas simply because they were
platform workers. Congress determined that the general scope of
OCSLA's coverage, like the operation of DOHSA's remedies, would
be determined principally by locale, not by the status of the
individual injured or killed.
Id.
In concluding that OCSLA applies in this case, the district court relied
upon our decision in PLT Engineering. The district court placed particular
emphasis upon our observation that the situs requirement had been met in that
case because “the ‘locations where substantial work pursuant to the contract was
done were covered situses.’” Grand Isle Shipyard, Inc. v. Seacor Marine, LLC,
No. 06-1405, 2007 WL 2874808 at *3 (E.D. La. 2007)(quoting PLT Engineering,
895 F.2d at 1047). Considered in its entirety, our holding in PLT Engineering
does not support the result reached by the district court in this case. PLT
Engineering was a breach of contract case in which we concluded that OCSLA
applied to a dispute involving work on an undersea gathering line. PLT
Engineering, 895 F.2d at 1049. We reached this conclusion in spite of the fact
8
that the work at issue in PLT Engineering was performed by vessels and divers
in the ocean, not on a platform. Id. In explaining our conclusion that OCSLA
nevertheless applied, we wrote that:
In the first place, the gathering line exactly fits the statutory
definition of an “other device[ ] permanently or temporarily attached
to the seabed ... erected thereon for the purpose of ... developing, or
producing resources therefrom.” 43 U.S.C. § 1333(a)(1). In addition,
the gathering line was buried beneath the ocean floor. It was
connected to a platform at one end. It was connected to a
transmission line at the other. The locations where the substantial
work was done were covered situses-the subsoil or seabed; an
artificial island; and an installation for the production of resources.
Thus the first condition is met.
Id. at 1047-48. We thus noted several factors in PLT Engineering which
supported a conclusion that the OCSLA situs requirement was met in that case,
and the district court placed excessive weight upon our observation that the
“locations where the substantial work was done were covered situses.”
It should be emphasized that PLT Engineering involved a contractual
dispute, and our analysis in that context does not necessarily apply to a tort
action arising on a vessel transporting workers on the high seas. Indeed, in PLT
Engineering, we distinguished that case from Tallentire on the basis that the
latter decision involved an “accident . . . on the high seas and in furtherance of
an activity bearing a significant relationship to a traditional maritime activity,”
namely “the ferrying of passengers from an ‘island,’ albeit an artificial one, to the
shore.” Id. at 1050 (quoting Tallentire, 477 U.S. at 218-19). The accident in this
case involved a vessel transporting workers between two “islands” rather than
between an “island” and the shore, but it is nevertheless clear that the vessel
here was engaged in the “ferrying of passengers,” which is “an activity bearing
9
a significant relationship to a traditional maritime activity.” Id. This case thus
falls squarely within the scope of Tallentire, as interpreted in PLT Engineering.4
We note that there are other bases upon which this case can be
distinguished factually from Tallentire, but none of these bases dictates a
different result here. It is true, for example, that the SEA HORSE IV was much
closer to an offshore platform at the time of the accident than the helicopter in
Tallentire, which crashed miles from the nearest platform. Appellant asserts in
its brief, and appellees do not dispute, that:
Although the district court stated in its Reasons and Order that the
vessel was a “few yards” from the platform when the injury
occurred, there is technically nothing in the record to support this.
The only evidence in the record on this point is the declaration from
the vessel’s captain, Henry Cameron, who notes that the vessel was
in the process of positioning “near” the platform when the accident
happened. Appellant’s Br. 7 n.2.
It is thus apparent that, unlike in Tallentire, the accident here occurred in close
proximity to an offshore platform. However, there is no suggestion that Neil was
in actual physical contact with the platform at the time of his accident. This is
significant in light of our precedent indicating that an accident involving a
plaintiff on a vessel who was nevertheless in physical contact with a platform
4
It seems clear that Tallentire provides the appropriate analysis for this case,
but we recognize that there may be other cases where the lines of demarcation
between PLT Engineering and Tallentire are less clear. While we view the fact that
PLT Engineering was a breach of contract case to be of some significance in
distinguishing it from Tallentire, our opinion today should not be read as
suggesting that a simple tort/contract dichotomy applies in this context. It is
apparent that the issues in this context are complex, and we leave the
establishment of boundaries between PLT Engineering and Tallentire to future
decisions.
10
may be deemed to have occurred on an OCSLA situs. In Hollier v. Union Texas
Petroleum Corp., 972 F.2d 662 (5th Cir. 1992), for example, a platform worker
was killed while stepping from a stationary crew boat to an offshore platform.
Hollier, 972 F.2d at 664-65. In concluding that the OCSLA situs requirement
was met, we noted that, while a crew boat “is generally considered to be a vessel,
not an artificial island” because “the [employee] was in physical contact with the
platform at the time of his injury,” the situs requirement was met in that case.
Id.
We reached a similar result in Hodgen v. Forest Oil Corp., 87 F.3d 1512,
1527 (5th Cir. 1996), which involved a plaintiff on a vessel who was, at the time
of his accident, in physical contact with a rope connected to an offshore platform.
In contrast to Hollier and Hodgen, the evidence in this case is clear that Neil was
not in physical contact with an offshore platform at the time of his accident, and
we therefore deem it irrelevant whether the vessel on which he was traveling
was a few meters or a few miles from the platform. In neither case would the
SEA HORSE IV qualify as “the subsoil and seabed of the [OCS],” an “artificial
island” or an “installation . . . permanently or temporarily attached to the
seabed” within the meaning of § 1333(a)(1).
The district court acknowledged Hodgen in its order, writing that:
Seacor argues that the dispositive issue is whether the vessel was
in physical contact with the platform or seabed at the time of the
accident. In making this argument, Seacor is asking the Court to
apply a bright line rule that if there is no physical connection with
an OCSLA situs, state law does not apply. However, the Fifth
Circuit “does not apply any physical contact rule with the rigidity
that [Defendant] would impose.” Hodgen, 87 F.3d at 1527
(discussing Hollier v. Union Texas Petroleum Corp., 972 F.2d 662
(5th Cir. 1992)).
11
Grand Isle, 2007 WL 2874808 at *3. A closer review makes it clear that Hodgen
does not support the result reached by the district court in this case. In making
the aforementioned observation in Hodgen, we were responding to a rather
hyper-technical argument that the offshore worker in that case had actually
suffered his injuries after he had let go of the rope connecting him to the
platform, thus negating any finding of physical contact. Hodgen, 87 F.3d at
1527. In responding to this argument, we wrote that:
Even if the evidence were pellucid that Hodgen's injuries were
caused by the spill onto all fours, and that Hodgen released the rope
at this precise moment, we would still find OCSLA situs present. In
Hollier, the injured worker “was crushed, then drowned.” 972 F.2d
at 664. Unless we are to believe that the Hollier plaintiff sank
immediately to the seabed or drowned while at all times remaining
in contact with the platform, we must presume that the drowning
did not occur while the worker was in physical contact with an
OCSLA situs. Thus, the Hollier court's holding would compel the
conclusion that this circuit does not apply any physical contact rule
with the rigidity that appellants would impose.
Id. It should be apparent from this quote that we were merely stressing in
Hodgen that we would not carry any physical contact requirement to extreme or
absurd lengths, noting that we had not done so in Hollier. However, the fact
remains that, in this case, there is no argument whatsoever that Neil was in
contact with the platform at the time of his injury, as there was in Hodgen and
Hollier. This case is thus clearly distinguishable from those decisions, and the
district court erred in interpreting them as supporting OCSLA’s applicability in
this case.
We note that the issue here was recently addressed by U.S. District Judge
Jay C. Zainey in a September 2007 summary judgment ruling in Fuselier v. Sea
12
Boat Rentals, Inc., No. 06-4488, 2007 WL 2713278 (E.D. La. 2007). Fuselier
involved a lawsuit filed by a platform worker who tripped over baggage on the
M/V SEA BREEZE, a vessel which was transporting him to his work offshore.
In rejecting an argument that the LOIA should apply as surrogate federal law
under OCSLA, Judge Zainey interpreted Tallentire and Demette as supporting
a conclusion that:
the threshold determination that must be made when determining
whether state law governs a controversy arising on the OCS is
whether the OCSLA applies. And the OCSLA only applies if the
controversy arises on an OCSLA situs. The “controversy” in this
case is Fuselier's claim for injuries that he sustained aboard the
SEA BREEZE. Fuselier was injured on the high seas while en route
to an OCSLA situs. It is undisputed that Fuselier did not sustain
his injuries on an OCSLA situs. . . . Although no decision,
non-binding or otherwise, provides the Court an analytical roadmap
for the appropriate analysis to be used in this case, the decisions
that bind this Court unequivocally hold that the OCSLA does not
reach controversies that do not arise on an OCSLA situs.
Fuselier, 2007 WL 2713278 at *4, citing Tallentire and Demette. Judge Zainey
accordingly concluded that the OCSLA situs requirements was not met in that
case and that it was therefore unnecessary to proceed past the first factor in the
PLT Engineering test.
In this case, it is likewise apparent that the SEA HORSE IV does not
qualify as an OCSLA situs under § 1333(a)(1), as interpreted in Demette. The
first part of the PLT Engineering test is therefore not met, and the district court
erred in concluding that OCSLA applied in this case. By extension, the district
court likewise erred in concluding that the LOIA applied as surrogate federal
law to bar Seacor’s indemnity claims against Grand Isle. We therefore VACATE
the district court’s order invalidating the indemnity agreement in this case and
13
granting summary judgment in favor of Grand Isle and Gray.
The district court indicated in its summary judgment order that appellees
had raised an additional argument before it, namely that “Section 905(b) of the
LHWCA is applicable to the case and prohibits enforcement of the indemnity
provision.” Grand Isle, 2007 WL 2874808 at *1. The district court did not
address this argument in its order, and counsel for appellees emphasized during
oral argument that this argument would remain outstanding regardless of our
resolution of the OCSLA issues on appeal. Without expressing any opinion
regarding the merits of this argument, we conclude that this case should be
REMANDED so that the district court may address it and any other outstanding
issues in this declaratory judgment action.5
VACATED AND REMANDED.
5
It appears that there are, at least potentially, other issues in this case which
are not resolved by our opinion today. For example, appellees asserted in their
declaratory judgment petition that “Gray’s insurance policies issued to [Grand Isle]
do not provide Seacor coverage for Denny Neil’s claims,” and nothing in our opinion
today addresses the scope of insurance coverage provided by Gray.
14