Appendix — Shell Oil Co. v. Olsen

Supreme Court, U. & 7

LED ö

AUG 28 1979

In the |

Supreme Court of the Anited RODAK, IR., SLERK

OCTOBER TERM, 1978

No. 79-317

SHELL OIL COMPANY,

Petitioner,

V.

MARY OLSEN, ARGONAUT INSURANCE COMPANY,

CHRISTINE W. CARVIN, and GORDON DAVIS

WALLACE,

Respondents.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

JOHN O. CHARRIER, JR.

JONES, WALKER, WAECHTER,

POITEVENT, CARRERE &

DENEGRE

225 Baronne Street, 28th Floor

New Orleans, Louisiana 70112

Telephone: (504) 581-6641

Counsel for Petitioner

——

A B Letter Service, Inc., 327 Chartres St., New Orleans, La. (504) 581-5555

INDEX

PAGE

Appendix A - Minute Entry of the United States District

Court of the Eastern District of Louisiana,

% oo 6A sb bb eed es bees A-1

Appendix B - Minute Entry of the United States Dis-

trict Court for the Eastern District of

Louisiana, July 15, 1975............ A-20

Appendix C - Opinion of the court of appeals,

ge SS eS ee A-34

Appendix D - Denial of rehearing en banc by the

court of appeals, December 1,1977.... A-74

Appendix E - Opinion of the court of appeals

certifying questions to the Louisiana

Supreme Court, May 12,1978 ....... A-76

Appendix F - Opinion of the Louisiana Supreme

Court, January 26, 1979............ A-83

Appendix G - Opinion of the court of Appeals,

. rrererre rr re Tr rey A-116

——

A-1

APPENDIX A

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Filed: June 6, 1974

Minute Entry

June 6, 1974

Heebe, J.

MARY OLSEN, et al. CIVIL ACTION

versus NO. 72-1240

SHELL OIL COMPANY, et al. SECTION P.

CHRISTINE W. CARVIN, et al. CIVIL ACTION

versus NO. 70-2986

SHELL OIL COMPANY, et al. SECTION B

FRANK WINSTON BOOKER, et al. CIVIL ACTION

versus NO. 71-894

SHELL OIL COMPANY, et al. SECTION B

GORDON DAVIS WALLACE CIVIL ACTION

versus NO. 71-1144

SHELL OIL COMPANY, et al. SECTION B

ARGONAUT INSURANCE COMPANY CIVIL ACTION

versus NO 71-1265

SHELL OIL COMPANY, et al. SECTION B

(CONSOLIDATED CASES)

On a previous day this case came on for trial on the issue

of liability alone, and the Court, after hearing the evidence

A-2

and studying the briefs and memoranda filed by the parties,

makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

1. On May 6, 1970, a hot water heater explosion occurred

aboard a fixed platform owned by Shell Oil Company located

in the Eugene Island Area, Block 259, in the Gulf of Mexico,

off of the coast of Louisiana. The individual plaintiffs in this

case are the legal representatives of men killed in the explo-

sion, except for Gordon Wallace who sues for injury. The

platform was designated as Shell's C“ platform and drilling

was being conducted from the platform by a drilling contrac-

tor known as Movible Offshore, Inc. The individual plaintiffs

were all employees of Movible Offshore, Inc. (Movible).

2. To conduct the drilling operations from the platform,

Movible had located its modular and movable drilling rig on

the platform. Movible designated the rig at this particular

location as Movible Rig No. 4. Movible Rig No. 4 consisted

of all equipment necessary to drill a well, including a derrick

or mast, drawworks, the very large engines which were nec-

essary to power the drilling equipment, and all normal appur-

tenances to a drilling operation. In addition to this, Movible

had its modular living quarters on the Shell platform which

provided a galley area for feeding the men, sleeping quarters,

shower and bathroom facilities and a lounge area. This

modular living unit was fully movable, and when the rig was

moved from one platform to another, it was picked up as a

unit by a derrick barge and then transported to the new site

and duly placed on the platform in such a way that cutting

and burning of metal would be required to remove it.

2

1

8

8.

1

i

wy

3

»

A-3

3. Under the working arrangement in effect between Shell

and Movible, two Movible drilling crews consisting of six men

each worked opposite shifts so that the drilling rig could be

kept in operation 24 hours a day. Of the twelve men com-

posing the two drilling crews, two were drillers, two were der-

rickmen, six were rotary helpers, and two were power plant

operators.

In addition to these men, Movible also provided three

roustabouts (charged with platform maintenance), one

welder, one crane operator, and a commissary crew, e. g.,

several people charged with the duty of providing for the

food service and the upkeep and maintenance of the interior

of the living quarters. Shell performed none of the actual

operations on the rig and had only one permanent represen-

tative there. He was provided quarters in the Movible modu-

lar living unit but concerned himself with observing the

drilling operations conducted by Movible.

4. The living quarters module which Movible brought to

the site was a complete and self-contained unit. It was built

on skids so that it could be picked up as one unit and moved

from platform to platform. The quartersunit was equipped

with a galley and related dining area and living area. Ad-

ditionally, the quarters unit was equipped with two electric

water heaters. One water heater was located in the galley

area and another was located in the pantry area. The pantry

heater provided water to the showers while the galley heater,

in the main, provided water to the galley equipment. These

water heaters were Movible equipment and were wholly

owned, as was the living quarters unit, by Movible Offshore,

Inc.

5. On November 1, 1968, Pacific Employers Insurance

Company (Pacific), an affiliate of the Insurance Company of

A-4

North America (INA), issued Standard Workman’s Compen-

sation and Employer’s Liability Policy No. PWC 06502 to

Movible Offshore, Inc. The policy period commenced at

12:01 a.m. on November 1, 1968 and terminated on Novem-

ber 1, 1969. The policy of insurance issued by Pacific to

Movible contained the following language with respect to

safety inspections:

“The Company and any rating authority having

jurisdiction by law shall each be permitted but not

obligated to inspect at any reasonable time the

work places, operations, machinery and equipment

covered by this Policy. Neither the right to make

inspections nor the making thereof nor any report

thereon shall constitute an undertaking on behalf

of or for the benefit of the insured or others, to

determine or warrant that such work places, opera-

tions, machinery or equipment are safe.

(emphasis supplied)

6. Shortly after commencement of the policy period,

INA officials, including its New Orleans Manager, Mr. H. K.

Dulaney, participated in discussions with representatives of

Movible, including the official responsible for its safety

program, Mr. J. H. Brazier. The discussions focused on the

services which would be rendered by INA in connection with

its coverage. Mr. Gilbert J. Stansburv was introduced as the

INA representative who would be handling the Movible ac-

count.

7. During this initial meeting, Dulaney informed Movible

regarding INA’s policy of loss control,“ ie., INA under-

stood its obligation to be one of motivating the management

of its insured to undertake a complete safety program on

their own. INA would provide the company with brochures,

ORI

A-5

posters, films and information for use at safety meetings and

would also make visitations to rigs for the purpose of point-

ing out unsafe practices and making recommendations for

changes. Dulaney stated that INA was well aware that

Movible had its own extensive safety program. Brazier re-

plied that Movible was highly competent in promoting safety

within their operations and expected INA to work within

Movible’s program.

8. Brazier informed Dulaney that every man on a Movible

rig was considered a safety engineer and had safety responsi-

bilities. Dulaney had the impression that each toolpusher

had specific expertise in safety with respect to conditions

which existed on the rigs. To encourage safety practices by

the men and to prevertt lost time accidents, Movible had an

incentive program, awarding various prizes to the men with

the best safety records. Movible held daily safety meetings

before each crew went to work and weekly safety meetings

in which all men on the rig participated. Movible officials

also performed safety inspections on its rigs. Daily inspec-

tions took place under the direction of the Movible tool-

pusher and weekly visitations to the rigs were made by

Movible’s Drilling Superintendent and his assitant. The pur-

pose of these inspections was to check machinery, safety

equipment, safety reports and to fill out safety inspection

reports. As a result of its extensive safety program, Movible

won first place in the American Oil Well Drillers Association

safety awards program during eight of the past nine years.

9. When Brazier inquired as to whether INA would in-

spect all of the rigs each month, Dulaney responded that INA

could not undertake this type of inspection but that it would

attempt to inspect the rigs on a periodic basis and transmit

A- 6

its recommendations to Movible.

10. Throughout the policy period, Movible continued

to perform safety inspections on its rigs including Movible

Rig No. 4. The Court finds that INA represented to Movible

and its officials that it would conduct periodic inspections of

the rigs as a supplement or adjunct to Movible’s continuing

safety program.

11. INA’s usual procedure to follow up safety recommen-

dations made by its inspectors was to receive written replies

from the insured indicating whether suggested action had

been completed. Movible, however, never, or rarely, gave

INA the requisite written report. This conduct led to the

cancellation of INA’s safety services for Movible. The rou-

tine of INA and Gilbert Stansbury, as far as Movible was con-

cerned, was to make actual inspections to see whether pre-

vious safety recommendations had been complied with. In

at least one other case, Mr. Stansbury discovered, during a

follow up inspection, that his recommendations concerning

a hot water heater temperature pressure relief device had not

been followed. Thus, the evidence preponderates that INA

undertook to check, by inspection, on compliance with its

recommendations. The evidence further indicates that

Movible, contrary to its representations about its own safety

program, relied on INA to make actual inspections to secure

compliance with Stansbury’s safety recommendations instead

of undertaking to check and report compliance on its own.

12. On January 22-23, 1969, Mr. Stansbury visited

Movible Rig No. 4 for the purpose of viewing Movible’s

safety practices on the rig, including making a safety inspec-

tion. During his inspection, Stansbury was accompanied by

the Movible toolpusher, Mr. Carroll Desormeaux.

POOLE POT NO

A-7

13. Stansbury inspected the hot water heaters in the pan-

try and in the galley of the living quarters on the rig. At a

safety meeting on the rig, Stansbury made several suggestions

with respect to safety practices, including specific recom-

mendations with respect to the heaters which recommen-

dations were given in writing to the toolpusher, Desormeaux,

and were later transmitted to Movible’s management.

14. Stansbury recommended that the fusible plug relief

valve be changed to a temperature pressure relief valve and

that a procedure be established for weekly activation of the

test lever on the temperature pressure relief valve to insure its

proper working condition. This was a sound recommen-

dation in accordance with standard manuals for plumbing

codes. He also suggested that the valve on the galley hot

water heater have its outlets piped to the outside to prevent

injury or property damage if it were activated. Stansbury did

not make any specific recommendations as to type or manu-

facturer other than to suggest that the valve was to be a com-

bination temperature pressure relief valve for a hot water

heater.

15. Movible failed to follow Stansbury’s recommendations

with respect to the valves. Movible’s management compre-

hended the nature of Stansbury’s recommendation. Prior

insurers had made the same or similar suggestions and Stans-

bury had made the same suggestions during visits to other

Movible rigs. However, those in charge of obtaining the

proper valve apparently did not understand the recommenda-

tion. Movible’s toolpusher, Desormeaux, had the impression

that Stansbury had simply suggested that the valve be chang-

ed to provide for a drain line in order to prevent someone

from being scalded in the event the valve were to pop off.“

A-8

Desormeaux failed to comprehend what the insurer had sug-

gested although Stansbury’s written recommendation makes

it clear that INA wanted Movible to change to a combination

temperature pressure relief valve.

16. When Desormeaux instructed Movible’s purchasing

agent, Mr. Ray Brashear, to obtain new valves, he told Brash-

ear that he wanted a valve with threads on the outside so J

could run a line outside the living quarters.“ Desormeaux

told Brashear the pressure setting he wanted for the valve and

its size but did not give Brashear any temperature require-

ment for the valve. Most importantly, Desormeaux neglected

to inform Brashear that the valves he requested were to be

placed on hot water heaters. According to Brashear, the

Movible toolpusher probably requested a Texsteam' relief

valve.

17. On January 29, 1969, Movible placed an order with

the New Iberia area Texsteam distributor, Pneumatic Service

& Equipment, Inc., (Pneumatic), for two 3/4 inch 5550

Texsteam relief valves set at 125 Ibs. The relief valve which

Movible ordered was delivered that same day by Pneumatic.

18. The relief valve which Movible ordered was a pressure

relief valve only, not a temperature pressure relief valve as

Stansbury had recommended.

19. The valves were replaced on February 3, 1969. Desor-

meaux inspected the heaters after the installation of the

valves and concluded that everything looked okay. Desor-

meaux’s replacement, Mr. Wyman Haas, recalled being told

by Desormeaux that Stansbury had recommended changing

the pop-off valve. Haas looked at the heater after the install-

A-9

ation was completed and noted that the new valve was a Tex-

steam valve which had a little handle on the side. The valve

appeared to be just like the one found in his home, and it

looked all right to him.

20. On October 7, 1969, Stansbury returned to Rig No.

4 and interviewed the Movible toolpusher, Mr. Haas. At that

time, at Movible’s request, Stansbury was visiting the rigs via

helicopter, reviewing the safety practices on three to five

rigs per day. Stansbury reported that his previous twelve

recommendations, including the one respecting the hot water

heater valves, were completed. Stansbury could not recall

whether or not he examined the heaters on October 7, 1969.

Stansbury testified that if Toolpusher Haas had verbally

assured him that the proper valve had been installed, Stans-

bury would have taken his word for it. Also, Stansbury testi-

fied that if he had made a visual inspection, he probably

would have noticed that an improper relief valve had been

installed. Accordingly, the evidence preponderates that no

visual inspection was made but that, instead, Stansbury re-

lied on Haas’ verbal assurance that Stansbury’s recommenda-

tion had been followed.

21. INA lost the Teledyne account, including Movible

Offshore, Inc., during the year 1969. After the expiration of

the policy period on November 1, 1969, INA/Pacific no

longer provided coverage for Movible. Argonaut Insurance

Company was Movible’s insurer at the time of the casualty.

22. On May 6, 1970, the hot water heater located in the

pantry of the living quarters aboard Movible Rig No. 4 ex-

ploded, resulting in the deaths and injuries for which damages

are sought in this litigation. The evidence indicates that the

A-10

bottom of the hot water heater ruptured as a result of great

pressure which built up in the tank. Then, the great explo-

sive force was created when the water in the heater, which

was superheated to a temperature of above its boiling

point of 212 F., instantly “flashed” into steam when freed

from the pressured confines of the tank and just as instantly

expanded to more than 1,000 times its liquid volume.

Superheated water would have had to be present for an

explosion as powerful as this one to have occurred. Conse-

quently, the evidence preponderates that, had a relief valve

with temperature relieving capabilities been installed in the

heater, it would not have exploded in such a fashion.

23. The heater was equipped with two heating elements,

one inserted into the heater through a hole near the top, the

other through a hole near the bottom. Each element was

attached to a flange about four inches square. Each flange

had holes through the corners by which the flange was in-

tended to be bolted to the heater. When the flange was

secured to the side of the heater, the protruding element

would be immersed in the water. The temperature of the

water was controlled by thermostats, one mounted near the

flange at the top to regulate the heat of that element, the

other mounted near the flange at the bottom to control the

heat of that element. There was found attached to the heater

after the accident a flange, mounted near the bottom hole,

manufactured by Thermalink, which was not a party to

any of the lawsuits. No element was attached to it. A

flange and element manufactured by defendant E. L.

Wiegand under the name of ‘‘Chromolux”’ were found in the

debris after the accident. A control manufactured by the

‘defendant Therm-O-Disc was also found in the debris. Rem-

nants of another control were also found but its manufac-

A-11

turer was not identified.

24. The plaintiffs’ post trial brief admits, and the Court

finds, that there has not been sufficient proof to connect

either the Therm-O-Disc control or the Wiegand flange or

hearing element with the explosion at issue in this case.

25. The evidence in this case certainly preponderates that

this explosion could not have occurred had the Texsteam

5550 pressure relief valve properly relieved the pressure in

the heater tank at 125 lbs. There is, however, no direct evi-

dence that the valve was defective, and the Court is convinc-

ed that the circumstantial evidence in the case leaves open

the reasonable possibility that the valve may not have re-

lieved the pressure for reasons other than a defect in the

valve itself. The Court notes that Mr. Harold L. Flettrich,

the most credible expert to testify in the case, conceded that

the ‘‘blockage’’ of the pressure relief system in this case

could have been caused by 1) a defect in the piping; 2) scale

building in the valve, combined with lack of use of the test

lever by Movible personnel; 3) the misplacement of the valve

below the check valve which prevented hot water from es-

caping from the tank back down the cold water line; 4) al-

tered conditions in the functioning of the valve system due to

a great heat buildup, especially when combined with a

closed check valve and an opening reduced one half by scale

accumulation.

26. Argonaut Insurance Company, Movible’s compensa-

tion carrier at the time of the explosion, has intervened in

all of these consolidated cases and has also filed a separate

suit against the various defendants to recover monies paid on

A-12

behalf of injured parties who have filed no lawsuits against

third parties. No formal compensation awards were rendered

against Argonaut by the Commission.

CONCLUSIONS OF LAW

1. The Court has jurisdiction over these consolidated cases

pursuant to the Outer Continental Shelf Lands Act, 43

U.S.C. § 1333.

2. There is no evidence in this case to indicate that any

negligence of Shell Oil Company was a proximate cause of

the explosion.

3. Of course, Louisiana law, insofar as it does not conflict

with federal law, is applicable to this case. Rodrigue v.

Aetna Cas. & Sur. Co., 395 U.S. 352 (1969).

4. Under the facts of this case, Shell Oil Company is not

liable to the plaintiffs pursuant to Art. 2322 of the Louisi-

ana Civil Code. See, this Court’s minute entry of May 14,

1973.

5. After much reflection, the Court is convinced that the

Secretary of the Interior’s regulations found at 30 C. F. R.

§ 250.45 and 30 C.F.R. §250.46 do not, under the facts of

this case, create an implied cause of action against Shell Oil

Company. Those regulations read as follow:

“The Outer Continental Shelf Lands Act enacted

on August 7, 1953, authorizes the Secretary of

the Interior at any time to prescribe and amend

such rules and regulations as are appropriate and

A-13

necessary for the regulation of oil leases on the

Outer Continental Shelf. Pursuant to this enabling

legislation, the Secretary has promulgated the

following rules:

„ 250.45 Accidents, fires, and malfunctions.

In the conduct of all its operations, the lessee

shall take all steps necessary to prevent accidents

and fires, and the lessee shall immediately notify

the supervisor of all serious accidents and all fires

on the lease, and shall submit in writing a full re-

port thereon within 10 days. The lessee shall

notify the supervisor within 24 hours of any other

unusual condition, problem, or malfunction.

5 250.46 Workmanlike operations.

The lessee shall perform all operations in a safe

and workmanlike manner and shall maintain equip-

ment for the protection of the lease and its im-

provements, for the health and safety of all per-

sons, and for the preservation and conservation of

the property and the environment. The lessee

shall take all necessary precautions to prevent and

shall immediately remove any hazardous oil and

gas accumulations or other health, safety or fire

hazards.“

It is true, as a general proposition, that a civil remedy

may be implied for those clearly within the protective realm

of legislation or regulations in the public interest. Euresti

v. Stenner, 458 F.2d 1115, 1119 (10th Cir. 1972); Gomez v.

A-14

Florida State Employment Service, 417 F.2d 569 (5th Cir.

1969). See Note, Implying Civil Remedies from Federal

Regulatory Statutes, 77 Harv.L.Rev. 285 (1963). The work-

ers in this case were not clearly within that protective realm,

however, since it appears that the regulations in question

were not meant to apply to the housing module involved in

this case. The Outer Continental Shelf Lands Act, 43 U.S.C.

§ 1333(e)(1), provides that

„The head of the Department in which the Coast

Guard is operating shall have authority to promul-

gate and enforce such reasonable regulations with

respect to lights and other warning devices, safety

equipment, and other matters relating to the pro-

motion of safety of life and property on the islands

and structures referred to in subsection (a) of this

section or on the waters adjacent thereto, as he

may deem necessary.

The authority for the regulations involved in this case de-

rives from 43 U.S.C. § 1334 (a)(1), which provides:

%) (2) ! The Secretary shall ad minister the pro-

visions of this subchapter relating to the leasing of

the outer Continental Shelf, and shall prescribe

such rules and regulations as may be necessary to

carry out such provisions. The Secretary may at

any time prescribe and amend such rules and regu-

lations as he determines to be necessary and proper

in order to provide for the prevention of waste

and conservation of the natural resources of the

outer Continental Shelf, and the protection of

correlative rights therein, and notwithstanding any

A-15

other provisions herein, such rules and regulations

shall apply to all operations conducted under a

lease issued or maintained under the provisions of

this subchapter. In the enforcement of conserva-

tion laws, rules, and regulations the Secretary is

authorized to cooperate with the conservation

agencies of the adjacent States. Without limiting

the generality of the foregoing provisions of this

section, the rules and regulations prescribed by the

Secretary thereunder may provide for the assign-

ment or relinquishment of leases, for the sale of

royalty oil and gas accruing or reserved to the

United States at not less than market value, and, in

the interest of conservation, for unitization, pool-

ing, drilling agreements, suspension of operations

or production, reduction of rentals or royalties,

compensatory royalty agreements, subsurface

storage of oil or gas in any of said submerged

lands, and drilling or other easements necessary

for operations or production.

Both the wording of the statutes and regulations, and the

legislative history of the statutes, indicate that the authori-

ty of the Secretary of the Interior concerns drilling and pro-

duction operation practices and conservation. See, Hearings

Before the Senate Committee on Interior and Insular Affairs,

83rd Cong., lst Sess., on S. Bill 1901 (1953), p. 689; Senate

Report 411, 83rd Cong., lst Sess., p. 11. The Coast Guard,

on the other hand, is given the broad authority to regulate

safety practices which, in places other than fixed platforms,

is given by the Longshoremen’s and Harbor Workers’ Com-

pensation Act to the Secretary of Labor. 33 U.S.C. § 94la.

Pure Oil Company v. Snipes, 293 F.2d 60, 67-68, n. 12 (Sth

A-16

Cir. 1961). This conclusion is buttressed by the fact that the

platform safety regulations specifically exclude operating

equipment used and employed, nor to the methods and

operations used, in the drilling for and the production of

oil, gas, petroleum, or other subsoil minerals, nor to the

transportation thereof by pipeline.” 33 C. F. R. 5 140.05-5

(c). The Court finds that the operation of an independent

housing module on a platform is not a production or drilling

operation regulated by the Secretary of the Interior but is

rather a matter of general platform safety properly supervis--

ed by the Coast Guard. For example, the Coast Guard regu-

lations provide for the number of fire extinguishers to be

placed in all galleys, sleeping accommodations, etc. 33

C.F.R. Table 145.10(a). Armstrong v. Chambers & Kennedy,

340 F.Supp. 1220 (S.D.Tex. 1972), on which plaintiff relies,

concerned implied liability for violations of the Secretary

of the Interior’s Regulations but in that case the violations in

question resulted from oil drilling and storage operations,

and they were properly within the reach of the Secretary’s

regulatory authority.

In passing, it should be noted that no violations of any

Coast Guard regulations have been alleged, and the Court,

after reading those regulations, has found none which might

apply to the facts as proven in this case.

6. Under Louisiana law, while a plaintiff’s burden oi

making out his case by a fair preponderance of the evidence

may be met through the use of circumstantial evidence, such

evidence must be of a nature to exclude with a reasonable

amount of certainty all other reasonable hypotheses. Hargis

v. Travelers Indem. Co., 248 So.2d 833 (La. App. 1971). As

indicated earlier in the Findings of Fact, plaintiffs’ in this

“1

A-17

case have not met that burden with respect to E.L. Wiegand

Company, Therm-O-Disc, Inc., or Texsteam Corporation.

7. Louisiana law is not settled on the issue of whether its

tort law permits a Workmen’s Compensation carrier to be

sued for negligent inspection. One Louisiana appeals court

has stated that ‘‘A cause of action can lie against an insurer

for failure to inspect,” citing a Fifth Circuit case which noted

that such a cause of action did exist when not prohibited by

Workmen’s Compensation Statutes. Rogers v. Highlands Ins.

Co., 270 So.2d 277 (La.App. 1972), citing Keller v. Dravo

Corp., 441 F.2d 1239, 1243 (5th Cir. 1971); see. also, Hill

v. U.S. F. & G. Co., 428 F.2d 112 (5th Cir. 1970). Later,

another Louisiana appeals court first held that such liability

did indeed exist under general tort principles as expressed in

the Restatements of Torts, but on rehearing, reversed itself

over the dissent of one of the three judges. Kennard v.

Liberty Mutual Ins. Co., 277 So.2d 170, on rehearing 277

So.2d 174 (1973). It is the opinion of this Court that the

Louisiana Supreme Court would take the better of these two

views, that general tort principles do allow an action for

negligent inspection by a compensation carrier when not pro-

hibited by the compensation statute involved and when the

proper requirements are met.

8. The Court finds nothing in the Longshoremen’s and

Harbor Workers’ Compensation Act, 33 U.S.C. § 941, et seq.,

which would preclude an action against an insurer for negli-

gent inspection or which indicates that the insurance com-

pany stands in the shoes of the employer and is, therefore,

immune from suit by an injured employee. On the contrary,

the definition of ‘“‘employer’’ is used in its normal sense in

the Act, 49 F.Supp. 605 (D.C.Md. 1943), aff’d 141 F.2d 324

A-18

(4th Cir. 1944). The Act is to be liberally construed, Pills-

bury v. United Eng. Co., 342 U.S. 197, 200 (1951), in favor

of the injured employee. Voris v. Eikel, 346 U.S. 328

(1953); Nolco Chem. Corp. v. Shea, 419 F.2d 572 (5th Cir.

1969). See also, Watson v. Gulf Stevedore Corp., 400 F.2d

649, reh. den. 404 F.2d 1059 (5th Cir. 1968), cert. den.

394 U.S. 976 (1969); Reed v. S.S. Yaka, 373 U.S. 410, reh.

den. 375 U.S.410, reh. den. 375 U.S. 872 (1963); Potomac

Elec. Power Co. v. Wynn, 343 F.2d 295 (D.C. Cir. 1965);

Int. Terminal Operator Co. v. Miller, 208 N.Y.S. 2d 813, 28

Misc. 2d 445 (1960).

There are many cases on each side of the compensation

carrier liability question. See, e.g., the cases listed in Keller

v. Dravo Corporation, 441 F.2d 1239, 1243, notes 3 & 4

(Sth Cir. 1971). It suffices to say that this Court believes

that neither the language of the compensation act in this

case nor public policy justifies immunizing insurers against

liability for their own negligence. See, Larson, Workmen’s

Compensation Insurer as Suable Third Party, 1969 Duke

L.J. 1117.

9. According to the general principles of tort law appli-

cable to this case, an insurer is liable for a negligent inspec-

tion if 1) it has undertaken to perform the inspection or in-

spections in question, and 2) the evidence discloses an

actual reliance by the employer on those inspections to the

extent that the employer neglects his own safety inspection

program to the detriment of the plaintiff-employees. Stacy

v. Aetna Cas. & Sur. Co., 484 F.2d 289 (5th Cir. 1973). As

indicated earlier in the Findings of Fact, Pacific Employers

Insurance Company (INA), undertook the duty of inspecting

to see if its earlier safety recommendations had been follow-

A-19

ed, and Movable relied on these inspections to the extent of

neglecting its own inspection followup program. The evi-

dence further indicates that Inspector Gilbert Stansbury

negligently performed his assumed duty to make a followup

inspection and that his negligence was a proximate cause of

the injuries and deaths which are the subject of this lawsuit.

10. Argonaut Insurance Company's independent suit

against the defendants to recover compensation payments

made to parties other than plaintiffs in this case must be dis-

missed since those payments were not made pursuant to a

formal award. Joyner v. F. & B. Enterprises, Inc., 448 F.2d

1185 (D.C. Cir. 1971). Of course, this dismissal does not dis-

turb Argonaut’s interventions in plaintiffs’ actions.

Accordingly, the parties are instructed to submit proposed

judgments consistent with these findings and conclusions.

s/ Frederick J.R. Heebe

W.K. Christovich

William P. Rutledge Charles M. Steen

Wood Brown, III Joel Borrello

Mack Miller Kelly McKain

Frank Allen, Ir.

George B. Matthews

Donald Hoffman

Francis G. Weller

James E. Diaz

Alfred S. Landry

W. Eugene Davis

M.N. Grossel-Rossi

James Drury

A-20

APPENDIX B“

Minute Entry

July 15, 1975

HeebeJ.

Filed: Jul 15, 1975

MARY OLSEN, et al. CIVIL ACTION

versus NO. 70-1240

SHELL OIL CO., et al. SECTION B

CHRISTINE W. CARVER, et al. CIVIL ACTION

versus NC. 70-2986

SHELL OIL CO., et al. SECTION B

FRANK WINSI ON BOOKER, et al. CIVIL ACTION

versus NO. 71-894

SHELL OIL CO., et al. SECTION B

GORDON DAVIS WALLACE CIVIL ACTION

versus NO. 71-1144

SHELL OIL CO., et al. SECTION B

ARGONAUT INSURANCE CO. CIVIL ACTION

versus NO. 71-1265

SHELL OIL CO., et al. SECTION B

(CONSOLIDATED CASES)

This matter is before the Court on motions to amend the

Court’s Judgment of July 9, 1974, or alternatively, for a new

trial filed by Argonaut Insurance Company (Argonaut),

plaintiff in Civil Action No. 71-1265, the plaintiffs in the re-

» A-21

maining consolidated cases, and defendants Shell Oil Com-

pany (Shell) and Pacific Employers Insurance Company, an

affiliate of the Insurance Company of North America (INA).

The question of liability was hotly contested at trial, and the

motions for a new trial likewise have been strenuously argued

by all parties. The Court was requested to reserve rulings on

the motions until a transcript of the testimony could be ob-

tained.

The Court has now had the benefit of a review of that

transcript, as well as the extensive memoranda filed by all

parties. The questions raised at trial and in the post-trial

briefs are serious ones, and the Court has taken this oppor-

tunity to make a thorough and fresh reconsideration of the

entire case. Upon much reflection, the Court is now convinc-

ed that the findings of fact and conclusions of law in the

Court’s minute entry of June 6, 1974, should be amended to

reflect the following results: (1) INA is not liable to the

plaintiffs for any damages arising out of the explosion of the

hot water heater aboard Movible Rig No. 4 on May 6, 1970;

(2) Movible Offshore, Inc. (Movible) was negligent in failing

to obtain the temperature pressure relief valve recommended

by INA and that negligence was a proximate cause of the

plaintiffs’ injuries; and (3) Shell is entitled to indemnity from

Movible under the written indemnity contract between these

two parties for reasonable costs of defense and attorneys’

fees.

The Court’s findings of fact are set out in its minute entry

of June 6, 1974, and there is no reason to repeat what was

stated at length there. Instead, the Court will focus only on

those facts pertinent to the motions before the Court and on

the legal conclusions arising therefrom.

A-22

There is no doubt from the evidence introduced at trial,

particularly the deposition testimony, that INA had under-

taken to inspect Movible’s rigs on a periodic basis and to

transmit its recommendations to Movible regarding correc-

tion of any unsafe equipment or practices which it found.

Although the Louisiana law is not settled on the issue of

whether its tort law permits a Workmen’s Compensation

carrier to be sued for negligent inspection, compare Rogers v.

Highlands Ins. Co., 270 So.2d 277 (La.Ct. App. 1972) with

Kennard v. Liberty Mutual Ins. Co., 277 So.2d 174 (La. Ct.

App. 1973) (on rehearing), we remain convinced that the

better view, and the one which the Louisiana Supreme Court

would adopt, is that a cause of action for negligent inspec-

tion by a compensation carrier does lie when not prohibited

by the compensation statute involved. Further, as the Court

noted in its earlier opinion, nothing in the Longshoremen’s

and Harbor Workers’ Compensation Act, 33 U.S.C. § 941,

et seq., either in its express terms or by implication, indicates

an intent to immunize the employer’s compensation carrier

from a claim of negligent inspection.

Thus, had INA neglected to discover possible safety haz-

ards existing on Movible’s Rig No. 4, which in the exercise

of due diligence it should have discovered, it would be held

negligent and would be liable for any damages proximately

caused by that negligence. This is not the case, however.

Gilbert Stansbury, INA’s safety inspector for the Movible

account, discovered that the valve then in place on the hot

water heater in question was improper and recommended

that Movible install a temperature pressure safety valve. All

the experts testifying in this case have agreed that this is the

proper type of valve for the particular hot water heater in

question. However, through its own misunderstanding,

Movible ordered and installed upon the hot water heater a

A-23 :

pressure relief valve only - an inferior, if not totally inap-

propriate, valve for hot water heaters.

Stansbury returned to Rig No. 4 on October 7, 1969, some

eight and a half months after his initial inspection, to check

whether Movible had complied with his earlier safety recom-

mendations. The Court found that Stansbury made no visual

inspection of the heater upon his return but relied instead on

the verbal assurance of Movible’s toolpusher that Stansbury’s

recommendation had been followed.

Thus, the only claim of negligence possible from these

facts is that INA breached a duty owed by it to Movible to

physically reinspect each area in which a safety recommenda-

tion had been made to ascertain firsthand whether those

recommendations were complied with. Upon careful recon-

sideration of this question, we conclude that no such duty

was owed by INA to Movible and that Stansbury acted

reasonably in accepting the asurance of Movible’s toolpusher

that the recommended valve was in place upon the heater.

Such a duty of reinspection would be beyond any duty pre-

sently imposed by the case law. Even those cases which

allow a cause of action for negligent inspection speak only

of the initial duty of the insurer to inspect the premises

and discover hazardous conditions. See, e.g., Stacy v. Aetna

Casualty & Surety Co., 484 F.2d 289 (5th Cir. 1973); Keller

v. Dravo Corp., 441 F.2d 1239 (5th Cir. 1971); Rogers v.

Highlands Ins. Co., supra.

There is, as the Court has earlier noted, evidence in the

record that INA had undertaken on-site compliance inspec-

tions of Movible’s rigs and that Movible had asked for and

relied on this service provided by INA. But there is no evi-

A-24

dence at all to indicate that INA was obligated to disregard

assurances by Movible’s own employees that INA’s recom-

mendations had been adopted. To the contrary, Movible

had an extensive safety program of its own, and INA was in-

formed by Movible that each toolpusher had specific exper-

tise in safety conditions existing on the rigs. Stansbury had

no reason to disbelieve the statements made by Movible’s

toolpusher regarding the hot water heater valve.

We emphasize that at the time of Stansbury’s return on

October 7, 1969, he was reviewing the safety practices on

three to five rigs per day at the request of Movible. The short

time required to perform these tasks is an additional reason

why Stansbury’s acceptance of Movible’s on-site assurances

was reasonable. The evidence preponderates that INA was

under no duty to visually inspect Movible’s rigs for compli-

ance with its prior safety recommendations after being

assured by a knowledgeable Movible employee that those

recommendations had been followed. In short, we think that

Stansbury acted reasonably under the circumstances and is

not chargeable with negligence.

We have again carefully considered the claim urged by

INA in its motion for a new trial that Shell, as platform

owner, is strictly liable for violation of the Secretary of the

Interior’s regulations found at 30 C.F.R. §§250.45, 250.46.

This claim is based primarily on broad language contained in

Armstrong v. Chambers & Kennedy, 340 F.Supp. 1220

(S.D. Tex. 1972), aff'd in relevant part sub nom. In re Dear-

born Marine Service, Inc., 499 F.2d 263 (5th Cir. 1974).

The Fifth Circuit’s opinion affirming the portion of the

district court’s judgment relevant here was issued subsequent

A-25

to our decision in the instance case. The regulations read as

follow:

Ҥ 250.45 Accidents, fires, and malfunctions.

“In the conduct of all its operations, the lessee

shall take all steps necessary to prevent accidents

and fires, and the lessee shall immediately notify

the supervisor of all serious accidents and all fires

on the lease, and shall submit in writing a full

report thereon within 10 days. The lessee shall

notify the supervisor within 24 hours of any other

unusual condition, problem, or malfunction.

8 250.46 Workmanlike operations.

The lessee shall perform all operations in a safe

and workmanlike manner and shall maintain equip-

ment for the protection of the lease and its im-

provements, for the health and safety of all per-

sons, and for the preservation and conservation of

the property and the environment. The lessee shall

take all necessary precautions to prevent and shall

immediately remove any hazardous oil and gas

accumulations or other health, safety or fire

hazards.“

The issue is whether these regulations impose strict liabili-

ty upon an oil or gas lessee for failure to maintain safe equip-

ment, even if only tangentially related to the improvement of

its lease, or whether they encompass only such hazards which

may fairly be said to be related to oil drilling and production

operations. The question is not entirely free from doubt.

The terms of the regulation, to be sure, provide that the

A-26

lessee shall maintain equipment, inter alia, for the health

and safety of all persons.’’ Further, we recognize that there

is language in the district court’s opinion in Armstrong

which would support the broader reading of the regulations

in question. However, we remain convinced, for the reasons

stated in the Court’s minute entry of June 6, 1974, that the

regulations are inapplicable to the circumstances of this case.

We add here only a few additional comments in support of

that decision. The two regulations at issue are part of a

series of regulations (found at 30 C.F.R. §§250.1 - 250.100)

promulgated by the Secretary of the Interior, pursuant to

43 U.S.C. § 1334 (a)(1)? The Secretary is authorized by that

statute to prescribe ‘‘such rules and regulations as he deter-

mines to be necessary and proper in order to provide for the

prevention of waste and conservation of the natural re-

sources of the outer Continental Shelf, and the protection

of correlative rights therein. Nothing in this authoriz-

ing statute explicitly gives the Secretary the authority to pro-

mulgate regulations relating to safety. Certain safety regu-

lations relating directly to the maintenance and operation of

the lease may be justified as correlative to the primary

purpose underlying the legislation. If, however, the regula-

tions are construed broadly to require the lessee, under pain

of criminal penalties, see 43 U.S.C. 5 1334(a)(2)) to main-

tain safe equipment, no matter how tenuously related to its

drilling operations, that would raise a serious question

whether the Secretary, in promulgating those regulations, had

exceeded the authority granted to him under the enabling

statute. We need not reach that question, however, because

we feel that the regulations in question, particularly 30

C.F.R. §250.46, should be more narrowly construed.

It is a familiar canon of statutory construction that a body

A-27

of statutes, or regulations, must be construed in pari materia.

So read, statutes often take on a narrower scope than their

broad terms would otherwise indicate. See, e.g., Reid v.

Immigration and Naturalization Service, 95 S.Ct. 1164

(1975).

The body of regulations, found at 30 C.F.R.§§ 250.1 -

250.100, promulgated pursuant to 43 U.S.C. § 1334(a)(1),

relates exclusively to the conduct of the drilling and produc-

tion of oil and gas. Even the regulation most heavily relied

on by the parties, 30 C.F.R. § 250.46, is not exclusively

designed as a safety measure. Rather, its purpose is to pro-

vide for the protection of the lease and its improvements“

and the preservation and conservation of the property and

the environment“ as well as health and safety of individuals.

Considering the limited authority given to the Secretary to

promulgate regulations, the nature of the requlations as a

whole, and the clear dichotomy between the jurisdictions of

the Secretary of the Interior over drilling operations and the

Coast Guard over matters of platform safety (discussed in the

Court’s earlier minute entry), we remain convinced that the

Secretary’s regulations are inapplicable to matters relating to

the safety of hot water heaters involved in this case.

This conclusion is buttressed, we think, by the opinion of

the district court in Armstrong v. Chambers & Kennedy, 340

F.Supp. 1220 (S.D. Tex. 1972), aff'd in relevant part sub

nom. In re Dearborn Marine Service, Inc., 499 F.2d 263

(Sth Cir. 1974). While holding the platform owner civilly

liable for violation of the Secretary’s regulation, the lower

court noted particularly, 340 F.Supp. at 1235, that the

failure to remove leaked oil from the platform was in direct

violation of 30 C. F. R. § 250.46, requiring the lessee to re-

A-28

move any hazardous oil and gas accumulations.” This por-

tion of the regulation is not at issue here, and thus does not

control the present case. Further, in discussing the source

of the duty imposed upon the lessee, the court noted that the

“exploration and development of offshore oil resources * * *

presents new and more dangerous challenges in its develop-

ment” and analogized the duty placed upon the oil lessee to

the traditional tort duty of one using an ultrahazardous sub-

stance. Id., at 1234. Thus, the underpinning for the court's

imposition of strict liability on the platform owner is the

peculiar dangers incident to oil exploration. Whatever the

dangers presented by hot water heaters, they are not peculiar

to oil exploration, and the rationale of the Armstrong court

would not apply.

While Shell is thus not liable to plaintiffs for damages aris-

ing out of the explosion, it is entitled to indemnity from

Movible for the costs of its defense in this case, including

reasonable attorneys’ fees. It is clear that an agreement to

indemnify and hold harmless, if applicable to the facts of the

case, includes payment of costs and reasonable attorneys’

fees incurred by the indemnitee. Loffland Bros. Co. v.

Roberts, 386 F.2d 540 (5th Cir. 1967).

There is no doubt that the indemnity agreement involved

in this casc obligated Movible to indemnify Shell for damages

imposed upon it which resulted solely from the negligent acts

of Movible. See this Court’s minute entry of May 14, 1973.

Movible’s sole opposition to Shell’s claim for attorneys’

fees is that this Court’s minute entry of June 6, 1974, did not

explicitly hold Movible to be negligent.

What is clearly implicit in the Court’s earlier opinion, we

make explicit now. The fact that the temperature pressure

A-29

relief valve, recommended by INA's safety inspector, was not

placed on the hot water heater, was due solely to the negli-

gence of Movible’s employees. ‘‘Desormeaux told Brashear

[both Movible employees] the pressure setting he wanted for

the valve and its size but did not give Brashear any tempera-

ture requirement for the valve. Most importantly, Desor-

meaux neglected to inform Brashear that the valves he re-

quested were to be placed on hot water heaters.’’ Opinion of

June 6, 1974, at 7. Movible makes no claim that it disagreed

with INA’s recommendations and reasonably felt that a

pressure relief valve was sufficient for the task. Instead,

through its own carelessness, it simply failed to obtain the

very type of valve which it intended to purchase.

Further, the fact that an improper valve was in use on the

heater was a proximate cause of the explosion. All the ex-

perts agreed that the pressure valve which Movible mistaken-

ly placed on the hot water heater was not specifically design-

ed for that use. While the exact cause of the explosion could

not be conclusively determined, there is no doubt that had

the temperature pressure relief valve been in place, the acci-

dent would have been prevented. The recommended type of

valve is designed to relieve excess pressure and temperature,

both of which contributed to the explosion of the hot water

heater. Since the explosion was proximately caused by

Movible’s negligence, Shell is entitled to indemnification

from Movible for reasonable attorneys’ fees and costs.

Finally, Argonaut Insurance Company seeks a reconsidera-

tion of the Court’s decision that it may not recover compen-

sation payments made to parties other than plaintiffs which

were not made pursuant to a formal award. Subsequent to

this Court’s decision, the United States Court of Appeals for

A30

the Fifth Circuit held that entry of a formal award is not a

condition of the carrier’s right to maintain suit. Louviere v.

Shell Oil Co., 509 F.2d 278 (5th Cir. 1975) That decision,

of course, would govern the disposition of Argonaut’s inde-

pendent suit. However, in light of our present disposition

of these consolidated cases, there is no defendant from whom

Argonaut can recover its compensation payments, and its

suit must, on that ground, be dismissed.

We have carefully considered all the other claims made by

the parties in their motions for a new trial. They are all dis-

posed of by previous decisions by the Court, and we find no

reason to depart from those determinations. Accordingly,

IT IS ORDERED that the motion of Pacific Employers In-

surance Company, defendant in these consolidated cases, for

rehearing to amend judgment or, alternatively, for a new

trial, be, and the same is hereby, GRANTED.

IT IS FURTHER ORDERED that the motion of Shell Oil

Company, defendant in these consolidated cases, to amend

judgment, be, and the same is hereby, GRANTED.

IT IS FURTHER ORDERED that the motion of plaintiffs

in Civil Actions Nos. 72-1240, 70-2986, 71-894, and 71-

1144 for additional findings, be, and the same is hereby,

DENIED.

IT IS FURTHER ORDERED that the motion of Argonaut

Insurance Company, plaintiff in Civil Action No. 71-1265,

for modification of judgment and, alternatively, for a new

trial, be, and the same is hereby, DENIED.

A-31

The parties are instructed to submit proposed amended

judgments consistent with the findings of fact and conclu-

sions of law contained herein.

A-32

1. We note that this contention was not made in the post-trial memo-

randum filed by the plainintiffs in these consolidated cases.

2. 43 U.S.C. §1334(a)(1):

“The Secretary shall administer the provisions of this subchapter re-

lating to the leasing of the outer Continental Shelf, and shall pre-

scribe such rules and regulations as may be necessary to carry out such

provisions. The Secretary may at any time prescribe and amend such

rules and regulations as he determines to be necessary and proper in

order to provide for the prevention of waste and conservation of the

natural resources of the outer Continental Shelf, and the protection of

correlative rights therein, and notwithstanding any other provisions

herein, such rules and regulations shall apply to all operations conduct-

ed under a lease issued or maintained under the provisions of this sub-

chapter. In the enforcement of conservation laws, rules, and regula-

tions the Secretary is authorized to cooperate with the conservation

agencies of the adjacent States. Without limiting the generality of the

foregoing provisions of this section, the rules and regulations prescribed

by the Secretary thereunder may provide for the assignment or re-

linquishment of leases, for the sale of royalty oil and gas accruing or

reserved to the United States at not less than market value, and, in the

interest of conservation, for unitization, pooling, drilling agreements,

suspension of oerations or production, reduction of rentals or royalties,

compensatory royalty agreements, subsurface storage of oil or gas in

any of said submerged lands, and drilling or other easements necessary

for operations or production.”

3. Further, under Armstrong v. Chambers & Kennedy, supra, the lessee

is liable as well for civil damages on a theory of strict liability.

4. The indemnity agreement between Shell and Movible reads as

follows:

“In the performance of the operations hereunder, contractor is an inde-

pendent contractor, Shell being interested only in the results obtained.

Contractor agrees to protect, indemnify and save Shell, and where the

operations are rendered in a joint operation, such other parties in the

joint operation with Shell, harmless from and against all claims, de-

mands and causes of action of every kind and character, arising in favor

of third parties on account of personal injuries and/or deaths or

damages to property occurring, in anywise incident to, in connection

A-33

with, or arising out of, contractor’s negligence in performing the oper-

ations under this contract.

5. The case decided by the Fifth Circuit, although arising in a more

complicated procedural context between different parties, involved the

very suit by Argonaut which is at issue here.

s/ Frederick J.R. Heebe

A-34

APPENDIX C

Mary OLSEN, Plaintiff-Appellant

Cross Appellee,

v.

SHELL OIL COMPANY et al., Defendants-

Appellees Cross Appellants,

v.

ARGONAUT INSURANCE COMPANY,

Intervenor-Appellant.

Christine W. CARVIN, Plaintiff-Appellant

Cross Appellee,

V

SHELL OIL COMPANY et al., Defendants-

Third Party Plaintiffs Appellees-Cross Appellants,

v.

TELEDYNE MOVIBLE OFFSHORE, INC., et al.,

Third Party Defendants-Appellees Cross Appellants,

v.

ARGONAUT INSURANCE COMPANY,

Intervenor-Appellant.

Frank Winston BOOKER et al.,

Plaintiffs-Appellees,

v.

SHELL OIL COMPANY et al.,

Defendants-Appellants.

Gordon Davis WALLACE, Plaintiff-Appellant

Cross Appellee,

v

SHELL OIL COMPANY et al., Defendants-

Appellees Cross Appellants,

v.

ARGONAUT INSURANCE COMPANY,

Intervenor-Appellant.

A-35

ARGONAUT INSURANCE COMPANY,

Plaintiff-Appellant Cross Appellee,

v.

SHELL OIL COMPANY et al., Defendants -

Appellees Cross Appellants.

No. 75-4019.

United States Court of Appeals

Fifth Circuit.

Oct. 26, 1977.

Rehearing and Rehearing En Banc

Denied Dec. 1, 1977.

Injured employee and representatives of deceased

employees of drilling contractor sued owner of drilling

platform and others for injuries and death caused by ex-

plosion of water heater in drilling contractor’s modular

living quarters which had been installed on the platform.

The United States District Court for the Eastern

District of Louisiana, at New Orleans, Frederick J. R.

Heebe, J., entered judgment in favor of platform owner,

and appeal was taken. The Court of Appeals, Fay, Cir-

cuit Judge, held that: (1) the Outer Continental Shelf

Lands Act did not create a private cause of action in

favor of plaintiffs against platform owner for breach of

regulation of the Secretary of Interior where there was

no negligence on the part of the platform owner, but (2)

certain questions as to Louisiana law under Louisiana

statute providing that owner of building is answerable

for damage occasioned by its ruin when this is caused by

neglect to repair it or as result of a vice in its original

construction wouid be certified to the Louisiana

Supreme Court.

Ordered accordingly.

A-36

1. Mines and Minerals 118

Outer Continental Shelf Lands Act did not create

private cause of action against owner of drilling platform

for breach of regulation of the Secretary of the Interior

in connection with explosion of electric heater in drilling

contractor’s housing module, in favor of employees or

representatives of employees of the contractor injured or

killed in the explosion, since: (1) protection of workers on

such platforms was not a motivating force behind the

legislation, (2) other civil remedies were provided by the

legislative scheme, (3) such remedies were not adequate

and it was not necessarily consistent with the legislative

goal of the Act to impose liability on platform owner

which had leased shelf land when such lessee was admit-

tedly free from fault, and (4) it appeared that the con-

troversy should be controlled by state law. Outer Con-

tinental Shelf Lands Act, 55 2-15, 4, 4(a)(2), c), 5, 5(a)(2),

43 U.S. C. A. §§ 1331-1343, 1333, 1333(a){2), c), 1334,

13342)

2. Negligence 44

Within Louisiana statute providing that owner of

building is answerable for damage occasioned by its ruin

when this is caused by neglect to repair it, ‘neglect to

repair” means failure to keep in repair and does not re-

quire a showing of negligence. LSA—C.C. art. 2322.

See publication Words and Phrases for other

judicial constructions and definitions.

A-37

Wm. P. Rutledge, Lafayette, La., for Olsen, et al.

Joel L. Borrello, New Orleans, La. for Argonaut Ins.

Co.

Donald A. Hoffman, New Orleans, La., for Pacific

Employers Ins. Co.

John O. Charrier, Jr., New Orleans, La., for Shell Oil

Co.

W. K. Chirstovich, Charles W. Schmidt, III, New

Orleans, La., for Teledyne Movible.

Francis G. Weller, New Orleans, La., for Wiegand Co.

& Thermo-Disc, Inc., other interested parties.

Patrick T. Caffery, New Iberia, La., for Texsteam

Corp.

W. Eugene Davis, New Iberia, La., for plaintiff-

appellant cross appellee.

Before GOLDBERG and FAY, Circuit Judges, and

DUMBAULD, District Judge.*

* District Judge for the Western District of Pennsylvania, sitting by

designation.

A-38

FAY, Circuit Judge:

The controversy before this court is factually complex

and presents some novel questions of law. It pertains to

the explosion of electric water heater in the living

quarters on a drilling platform on the Outer Continental

Shelf. The question is whether there is liability of the

platform owner, Shell Oil Company, to some of those

people who were either injured or killed as a result of the

explosion. The plaintiffs set forth two theories of liabili-

ty. First, they contend that Shell is answerable for the

injuries which have occurred because it violated certain

regulations issued by the Secretary of the Interior pur-

suant to the authority granted to him by the Outer Con-

tinental Shelf Lands Act, 43 U.S.C. § 1334 — the viola-

tion of which was a direct cause of the plaintiffs’ injuries.

In the alternative, the plaintiffs contend that the Loui-

siana Civil Code Art. 2322' imposes a form of strict

liability on certain owners of buildings,’ and, as a result,

Shell is liable to the plaintiffs regardless of its lack of

personal negligence. We hold that Shell is not liable for

breach of the federal regulations because the Outer Con-

tinental Shelf Lands Act, 43 U.S.C. § 1331 et seq., does

not provide specifically for a civil remedy for violations

of the statute or regulations, and because we feel that

this is not the type of situation in which a cause of action

should be implied or created. See Cort v. Ash, 422 U.S.

Louisiana Civil Code Art. 2322 provides:

The owner of a building is answerable for the damage occassioned

by its ruin, when this is caused by neglect to repair it, or when it is the

result of a vice in its original construction.

* The Louisiana courts have extended the definition of buildings

to include oil platforms. See Vinton Petroleum Co. v. L. Seiss Oil Syn-

dicate, Inc., 19 La. App. 179, 139 So. 543 (Ist Cir. 1932).

A-39

66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975). We also conclude

that it is impossible for us at the present time to rule on

the theory of liability based upon Louisiana Civil Code

Art. 2322. After an exhaustive study of Louisiana law,

we feel that there is no clear controlling precedent from

the highest court in that state, and, consequently, we are

compelled to certify the issue to the Lousiana Supreme

Court.

I. FACTS

On May 6, 1970, a hot water heater explosion occurred

aboard a fixed platform owned by Shell Oil Company in

the Gulf of Mexico off the coast of Louisiana. The plat-

form was designated as Shell's C“ platform, and drill-

ing was being conducted from the platform by a drilling

contractor known as Movible Offshore, Inc. (Movible).

The individual plaintiffs in this case are the legal

representatives of men killed in the explosion, except for

Gordon Wallace who sues for personal injury. The plain-

tiffs were all employees of Movible.

To conduct the drilling operations from the platform,

Movible had located its modular and movable drilling rig

on the platform. The rig consisted of all equipment

necessary to drill a well, including a derrick or mast,

drawworks, the very large engines which were necessary

to power the drilling equipment, and all normal ap-

purtenances to a drilling operation. In addition, Movible

had its modular living quarters on the Shell platform

which provided a galley area for feeding the men, sleep-

ing quarters, shower and bathroom facilities, and a

lounge area. The living quarters unit was equipped with

two electric water heaters. One water heater was located

in the galley area, and another was located in the pantry

area. These water heaters were Movible equipment and

were wholly owned, as was the living quarters unit, by

A-40

Movable. The modular living unit was fully movable,

and when the rig was moved from one platform to

another, it was picked up as a unit by a derrick barge and

then transported to a new site and secured on a platform

in such a way that cutting and burning of metal would be

required to remove it.

Under the working arrangement in effect between

Shell and Movible, two Movible drilling crews consisting

of six men each worked opposite shifts so that the drill-

ing rig could be kept in operation 24 hours a day. Shell

performed none of the actual operations on the rig and

had only one permanent representative there.

At the time Movible began drilling for Shell from Plat-

form C or shortly thereafter, Movible took out liability

insurance with Pacific Employers Insurance Company

(Pacific), an affiliate of the Insurance Company of North

America. In addition to providing liability insurance to

Movible, Pacific agreed to provide a safety engineering

and safety inspection service to Movible. This service

was provided largely through one Gilbert Stansbury, a

safety and technical representative of Pacific.

In connection with the safety engineering and

technical service provided by Pacific, Mr. Stansbury was

to visit the Movible rig on a quarterly basis. Mr.

Stansbury first visited the rig on January 23, 1969, and

then he did not revisit the rig until October 7, 1969. On

his first visit, Stansbury inspected the water heaters in

the company of Movible’s toolpusher, a Mr.

Desormeaux. At this time, he recommended (among

other things) that a pressure-temperature relief valve be

placed on the water heaters in question in place of the ex-

A-41

isting pressure relief valves. Movible failed to accurately

follow the recommendation of Mr. Stansbury, although

they should have understood the recommendation since

prior insurers had made the same or similar suggestions

and Stansbury himself had made the same recommenda-

tion during inspections of other Movible rigs. Instead of

ordering the proper type of ‘“pressure-temperature”’

relief valve, Movible ordered and installed another

pressure relief valve.

The valves were replaced on February 3, 1969. Mr.

Desormeaux inspected the heaters after the installation

of the valves and concluded that “everything looked

okay. On October 7, 1969, Stansbury returned to the

rig and interviewed another Movible toolpusher who had

since replaced Mr. Desormeaux. Mr. Stansbury did not

make a visual inspection of the water heater but relied on

the toolpusher’s assurances that his recommendations

had been followed. As a result, Stansbury reported that

all his recommendations had been fulfilled.

On May 6, 1970, the hot water heater located in the

pantry of the living quarters exploded resulting in many

deaths and injuries. The trial judge found that the bot-

tom of the hot water heater ruptured as a result of great

pressure which built up in the tank. Then, the great ex-

plosive force was created when the water in the heater,

which was superheated' to a temperature of above its

boiling point of 212° F., instantly flashed into steam

when freed from the pressured confines of the tank and

just as instantly expanded to more than 1,000 times its

liquid volume.

A-42

The trial judge further found that the fact that an im-

proper valve was in use on the heater was a proximate

cause of the explosion. All the experts agreed that the

pressure valve which Movible mistakenly placed on the

hot water heater was not specifically designed for that

use. While the exact cause of the explosion could not be

conclusively determined, there is no doubt that had a

working temperature pressure relief valve been in place,

the accident would have been prevented. The recom-

mended type of valve is designed to relieve excess

pressure and temperature, both of which contributed to

the explosion of the hot water heater.

On June 6, 1974, the trial judge entered his opinion

with respect to liability in the case. He found that there

was no negligence (as all parties admit) on the part of

Shell Oil Company; he held that Louisiana Civil Code

Act 2322 was inapplicable, and he held that certain

regulations of the Department of Interior did not create

strict liability as against Shell in the plaintiff's favor in

this case. In the same opinion Judge Heebe also held

that Pacific Employers Insurance Company was

negligent through one of its inspectors (Mr. Stansbury)

who faild to reinspect Movible’s premises after recom-

mending that the relief valve be changed on the water

heater which exploded. The trial judge also found that

the Texstream Corporation, the manufacturer of the

valve, was not liable. Judgment was entered according-

ly.

Thereafter, on motion to reconsider his judgment, the

trial judge issued another opinion in which he concluded

that the inspector for Pacific Employers Insurance Com-

pany was not negligent, but that his earlier opinion in all

other respects was correct. The court made explicit in

A-43

this opinion that the cause of the water heater explosion

was the negligence of Movible. The net result of this

decision, however, is that the plaintiffs recovered

nothing. Movible, who was originally a party to the ac-

tion, had earlier been granted a summary judgment on

the basis that the Longshoremen and Harbor Workers

Compensation Act made it immune from suit as the

employer of the dead and injured men. Movible is

presently in the litigation only as a third party defen-

dant to the claim of Shell Oil Company for indemnity.

From this final judgment of the district court, the plain-

tiffs appealed solely against Shell and solely on the basis

that Shell is strictly liable to them. Shell then lodged pro-

tective appeals against all of the co-defendants and

Movible for indemnity purposes. Movible did likewise.

II. BREACH OF THE FEDERAL REGULATION

A. The Plaintiffs’ Theory and Shell’s Rebuttal.

The plaintiffs’ theory of recovery is rather simple.

They argue that the Outer Continental Shelf Lands Act

empowers tine Secretary of the Interior to make regula-

tions for operation upon platforms such as Shell’s.

Specifically, 43 U.S.C. § 1334(a)(1) provides:

The Secretary shall administer the provisions of this

subchapter relating to the leasing of the outer Continen-

tal Shelf, and shall prescribe such rules and regulations

as may be necessary to carry out such provisions. The

Secretary may at any time prescribe and amend such

rules and regulations as he determines to be necessary

and proper in order to provide for the prevention of

waste and conservation of the natural resources of the

outer Continental Shelf, and the protection of correlative

rights therein, and, notwithstanding any other provi-

A-44

sions herein, such rules and regulations shall apply to all

operations conducted under a lease issued or maintained

under the provisions of this subchapter.

The plaintiffs assert that pursuant to this statutory

authority the Secretary of the Interior issued the follow-

ing regulations which are applicable in our controversy:

1) 30 C.F.R. § 250.30 Lease Terms, Regulations,

Waste, Damage and Safety. The lessee shall comp-

ly with the terms of applicable laws and regulations,

the lease terms, OCS Orders and other written orders

and rules of the supervisor, and with oral orders of the

supervisor...The lessee shall take all necessary

precautions to prevent damage to or waste of any

natural resource or injury to life, or property, or the

aquatic life of the seas.

2) 30 C.F.R. § 250.45 Accidents, Fires, and Malfunc-

tions.

In the conduct of all its operations, the lessee shall

take all steps necessary to prevent accidents and fires.

3) 30 C.F.R. § 250.46 Workmanlike Operations.

The lessee shall perform all operations in a safe and

workmanlike manner and shall maintain equipment

for the protection of the lease and its improvements,

for the health and safety of all persons, and for the

preservation and conservation of the property and the

environment.

A-45

It is argued by the plaintiffs that the above regula-

tions are presumptively valid and that they are ap-

plicable to our factual situation. They further argue that

Shell fas a lessee of submerged land on the Outer Con-

tinental Shelf} breached these regulations, and that this

breach visits liability upon Shell regardless of whether

or not Shell was in fact negligent. In support of this

theory of liability, the plaintiffs cite to us Armstrong v.

Chembers & Kennedy, 340 F.Supp. 1220 (S.D.Tex. 1972),

aff'd on other grounds sub nom. In Re Dearborn Marine

Service, Inc., 499 F.2d 263 (5th Cir. 1974). In Chambers

& Kennedy, the trial court approved a similar theory of

strict liability for breach of these regulations. The court

stated:

This court must interpret the congressional intent and

the Secretary’s reasons for promulgating the regulations

as imposing certain nondelegable duties upon C & K, as

the lessee and owners of the platform. The public policy

indicated by these legislative and administrative acts

are imperative to the common good and protection of our

national community. Thus, any violation, even a

nonfeasance, of the guidelines set as preventive

measures to accidents must expose the lessee to

ultimate liability in tort.

Id. at 1233, 1234.

Shell counters this argument by asserting that the

Secretary’s regulations are invalid. It contends that the

enabling statute give both the Secretary of the Interior

and the head of the department in which the Coast

—

A-46

Guard is operating authority to issue regulations,’ and it

was the Coast Guard exclusively that was given the

authority to issue safety regulations. Shell specifically

contends that:

the regulations upon which Judge Singleton relied

in Armstrong v. Chambers & Kennedy, 340 F.Supp.

1220 (S.D.Tex., 1972), being the same ones relied upon

by plaintiffs in this action (30 CFR 250.45—250.46), if

construed as safety and health regulations for the pro-

tection of life and property on the offshore platforms

so as to create strict liability in the lease owner, so ex-

tend and so modify the granting statute, 43 U.S.C.A.

1334, as to exceed the authority granted by the enabl-

ing legislation.

Brief for appellee at 31. To support this view, Shell

delves deeply into the legislative history of the Outer

Continental Shelf Lands Act only to emerge without

really proving their point. If the legislative history of the

statute shows anything, it is merely that nothing was

specifically said one way or the other as to whether or

not the Secretary of the Interior has the authority to

issue safety regulations. It does not necessarily follow,

as Shell alleges, that merely because the Coast Guard is

given the authority to regulate in the area of safety,

other agencies are devoid of this power.

A-47

Shell, however, does not rest its case solely on the

delegation of power theory. In the alternative, they

adopt the position taken by the trial court. The trial

court held that the regulations were validly pro-

mulgated, but were inapplicable to this particular fac-

tual setting. The court states specifically:

It is true, as a general proposition, that a civil

remedy may be impiied for those clearly within the

protective realm of legislation or regulations in the

public interest. Euresti v. Stenner, 458 F.2d 1115,

1119 (10th Cir. 1972); Gomez v. Florida State Employ-

ment Service, 417 F.2d 569 (5th Cir. 1969). See Note,

Implying Civil Remedies from Federal Regulatory

Statutes, 77 Harv.L.Rev. 285 (1963). The workers in

this case were not clearly within the protective realm,

however, since it appears that the regulations in ques-

tion were not meant to apply to the housing module in

this case. Both the wording of the statutes and

regulations, and the legislative history of the statutes,

indicate that the authority of the Secretary of the In-

terior concerns drilling and operation practices and

conservation. The Coast Guard, on the other hand,

is given the broad authority to regulate safety prac-

tices which, in places other than fixed platforms, is

given by the Longshoremen’s and Harbors Workers’

Compensation Act to the Secretary of Labor. The

Court finds that the operation of an independent hous-

ing module on a platform is not a production or drill-

ing operation regulated by the Secretary of the In-

terior but is rather a matter of general platform safety

properly supervised by the Coast Guard. Arm-

strong v. Chambers & Kennedy, 340 F.Supp. 1220

(S.D.Tex. 1972), on which the plaintiff relies, concern-

ed implied liability for violations of the Secretary of

A-48

the Interior’s Regulations but in that case the viola-

tions in question resulted from oil drilling and storage

operations, and they were properly within the reach of

the Secretary’s regulatory authority.

Minute Entry of Trial Court, June 6, 1974. (App.

729-731).

B. IMPLYING CIVIL REMEDIES

In our opinion, neither party touches on the point

which we feel is determinative of the legal effect of the

breach of these regulations by Shell Oil Company. That

is, even if we assume that the regulations were valid and

applicable to our factual setting, what, if any, is the legal

effect of their being breached by Shell? The trial court

touches on the issue in its above quoted conclusions of

law when it stated that civil remedies may be implied in

certain situations, but the Court erred in concluding that

a civil remedy may be extended to one injured by a

breach of a statute or regulation which does not

specifically provide for such relief as long as the person

injured is clearly within the protective realm of the

legislation or regulation. The inquiry which must be

made before implying a civil cause of action for a person

suffering injury as a result of another 's conduct in viola-

tion of a regulatory statute which does not expressly

provide for a civil remedy is not nearly so simple.

In 1916, the Supreme Court announced the doctrine of

implying private actions in the absence of specific

statutory authorization in Texas & Pacific Railway Co.

v. Rigsby, 241 U.S. 33, 36 S.Ct. 482, 60 L.Ed. 874 (1916).

Rigsby, a railroad employee, sought damages for in-

juries resulting from his employer’s violation of the

Federal Safety Appliance Act. The Court upheld his

recovery while recognizing that the Act did not express-

ly confer a private right of action. In broad language, the

Court stated:

A-49

A disregard of the command of the statute is a

wrongful act, and where it results in damage to one of

the class for whose especial benefit the statute was

enacted, the right to recover the damages from the

party in default is implied...

Id. at 39, 36 S.Ct. at 484.

This rather unique question of whether a court can or

should imply an action for an injured party who has no

express statutory remedy has sparked a great deal of

legal commentary, and a string of Supreme Court opi-

nions whose main virtues are not consistency of results.

The justification for implication most often proffered by

courts and commentators is that it merely furthers the

goals Congress was seeking to attain when it initially

enacted the legislation.‘ Congress may accomplish these

goals through regulation or prohibition of specified con-

duct. Generally speaking, however, these regulations or

prohibitions are only as effective as t 2 statutory sanc-

tions behind them, and, unfortunately, Congress must

often decide on these statutory sanctions without a prior

opportunity to evaluate their practical effectiveness. In

contrast, courts are charged with the duty of enforcing

the statute on a case by case basis, and have the oppor-

tunity to observe the effectiveness of the enforcement

mechanisms. Fully aware of this hindsight advantage,

the Supreme Court has sanctioned, in limited situations,

the implication of private civil remedies.

See, e.g., Comment, Private Rights of Action under Amtrak and

Ash: Some Implications for Implication. 123 U.Pa.L.Rev. 1392, 1393

(1975); Comment, Emerging Standards for Implied Actions Under

Federal Statutes, 9 U.Mich. J.L.Ref. 294, 296 (1976).

A-50

The criteria for courts to apply in deciding whether or

not to imply a civil cause of action have gone through

numerous changes since the implication doctrine was

first recognized in 1916.“ The Supreme Court’s most re-

cent pronouncement on the matter, however, delineates

the factors which we must consider in making that deci-

sion. In Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45

L.Ed.2d 26 (1975), the Supreme Court held that a private

cause of action for damages against corporate directors

should not be implied in favor of a corporate stockholder

under 18 U.S.C. § 610 — a criminal statute prohibiting

corporations from making a contribution or expen-

diture in connection with any election at which Presiden-

tial and Vice Presidentail electors...are to be voted

for. In making that decision, the court stated:

For example, in Switehmen s Union v. National Meditation Bd.,

320 U.S. 297, 64 S.Ct. 95, 88 L.Ed. 61 (1943), the Supreme Court

that if an act created a right there must be some method of

enforcing it, but also stated that the specification of one remedy in

the act would normally be understood to exclude another. Id. at 301,

64 S.Ct. 95. This is the first time the Court applied the rule of

statutory construction expressio unius est exclusio alterius to deny

implication. In Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939

(1946), the Supreme Court stated a rather liberal rule for vindicating

federal rights in an action for damages for violation of constitutional

rights. The Court stated that when ‘federally protected rights have

been invaded, it has been the rule from the beginning that courts will

be alert to adjust their remedies so as to grant the necessary relief.

Id. at 684, 66 S.Ct. at 777. This rather liberal attitude was given a set

back in the 1950’s when, in a series of three cases, the Court refused

to imply a remedy. See T. I. M. E., Inc. u. United States, 359 U.S. 464,

79 S.Ct. 904, 3 L.Ed.2d 952 (1959); Nashville Milk Co. v. Carnation

Co., 355 U.S. 373, 78 S.Ct. 352, 2 L.Ed.2d 340 (1958); Montana-

Dakota Util. Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246, 71

S.Ct. 692, 95 L.Ed. 912 (1951)

In 1964, the Court returned to a more liberal position in J.J. Case

Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964) when

it held that a private party could bring a derivative action for the use

of false and misleading proxy statements, in violation of section 14(a)

of the Securities Exchange Act of 1934. In reaching this conclusion,

the Court emphasized the broad remedial purposes of the Act, and

A-51

Indetermining whether a private remedy is implicit

in a statute not expressly providing one, several fac-

tors are relevant. First, is the plaintiff ‘‘one of the

class for whose especial benefit the statute was

enacted,” Texas & Pacific R. Co. v. Rigsby, 241 U.S.

33, 39, [36 S.Ct. 482, 484, 60 L.Ed. 874] (1916) em-

phasis supplied) — that is, does the statute create a

federal right in favor of the plaintiff? Second, is there

concluded that private enforcement was a necessary supplement to

effectuate the congressional purpose. In 1967, in Wyandotte

Transportation Co. v. United States, 389 U.S. 191, 88 S.Ct. 379, 19

L.Ed.2d 407 (1967), the Court reaffirmed its decision to Borak when it

held that the criminal sanction of section 15 of the Rivers and Har-

bors Act of 1899, 33 U.S.C. § 409, was not an exclusive remedy under

the statute. The Court articulated a set of three criteria for determin-

ing when an implied remedy should be found. First, the expressly pro-

vided criminal sanctions must be inadequate to ensure the full effec-

tiveness of the statute. Second, the interest of the plaintiff must be

within the protection of the statute. Finally, the injury must be of the

type that the statute was intended to forestall. These three criteria,

however, were not long-lived as the sole judicial test for implying

remedies. In National Railroad Passenger Corp. v. National Associa-

tion of Railroad Passengers, 414 U.S. 453, 94 S.Ct. 690, 38 L.Ed.2d

646 (1974) (Amtrak), there was a return to a more restrictive attitude

about implying civil remedies. The Amtrak Act, 45 U.S.C. § 301 et

seg. (1970), expressly provided that only the Attorney General had

the right to institute a civil action except in cases involving labor

agreements. The Court held that the express provision of the remedy

to the Attorney General precluded the inference of a civil action in

favor of the plaintiffs absent any clear indication in the legislative

history that a right of action should be inferred. The Court also stated

that the legislative history evidenced an intent to preclude civil

remedies, and that an implied remedy would conflict with the Act’s

policy of streamlining the proceses for eliminating unproductive rail

routes in order to save the overall passenger system.

The only other case of significance subsequent to Amtrak and

prior to Cort was Securies Investor Protection Corp. v. Barbour, 421

U.S. 412, 95 S.Ct. 1733, 44 L.Ed.2d 263 (1975). This controversy in-

volved whether a right of action by a private party was impliedly

created by the Securities Investor Protection Act of 1970 (SIPA), 15

U.S.C. § 78aaa et seg. The Court’s opinion followed the reasoning of

Amtrak and denied implication mainly because there was a lack of ex-

trinsic evidence indicating that Congress intended to imply private

A-52

any indication of legislative intent, explicit or implicit,

either to create such a remedy or to deny one? See,

e.g., National Railroad Passenger Corp. v. National

Assn. of Railroad Passengers, 414 U.S. 453, 458, 460,

[94 S.Ct. 690, 693, 694, 38 L.Ed.2d 646] (1974) (Am-

trak). Third, is it consistent with the underlying pur-

poses of the legislative scheme to imply such a remedy

for the plaintiff? See, e.g., Amtrak, supra; Securities

Investor Protection Corp. v. Barbour, 421 U.S. 412,

423, [95 S.Ct. 1733, 1740, 44 L.Ed.2d 263] (1975);

Calhoon v. Harvey, 379 U.S. 134, [85 S.Ct. 292, 13

This Court, not unlike the Supreme Court, has had a less than con-

sistent approach to implying civil remedies. The most oft cited case

this issue is Gomez v. Florida State Employment Service,

417 F. ad 569 (5th Cir. 1969). In Gomez, the employers of migratory

workers and certain state officials had allegedly violated the Wagner-

Peyser National Employment System Act. The workers alleged they

had been paid inadequately and subjected to abominable living condi-

tions. The only sanction set forth in the Act was a cutoff of federal

grants to the states for programs under the Act. This Court decided

that this remedy was wholly inadequate and held that the workers

were entitled to additional relief under the Act. In enacting this

by this court. One example is Breitwieser v. KMS Industries, Inc., 5

Cir., 467 F. ad 1391 (1972), in which it was held that the child labor pro-

visions of the Fair Labor Standards Act, 29 U.S.C. § 212, and the

regulations promulgated thereto, did not create a private causs of ac

7

7

f

i

f

f

f

3

1

;

i

:

remedy

te, an additional remedy should not be implied absent a showing

such relief is necessary to implement Congress’ intent in enac-

statute. The mere fact that the state workmen’s compensa-

a minimal recovery ($750 in this

„ “does not justify a federal court’s creating a new federal

based on a statute that gives no hint of such a remedy in a

that has traditionally been left to the states. Jd. at 1394.

1E

ce

|

b

El

A-53

L.Ed.2d 190] (1964). And finally, is the cause of action

one traditionally relegated to state law, in an area

basically the concern of the States, so that it would be

inappropriate to infer a cause of action based solely on

federal law? See Wheeldin v. Wheeler, 373 U.S. 647,

652, [83 S.Ct. 1441, 1445, 10 L.Ed.2d 605] (1963); cf. J.

I. Case Co. v. Borak, 377 U.S. 426, 434, [84 S.Ct. 1555,

1560, 12 L.Ed.2d 423] (1964); Bivens v. Six Unknown

Federal Narcotics Agents, 403 U.S. 388, 394-395, [91

S.Ct. 1999, 2003-2004, 29 L.Ed.2d 619] (1971; id., at

400, [91 S.Ct. [1999] at 206] (Harlan, J., concurring in

judgment).

Id. at 78, 95 S.Ct. at 2088.

There is no question that the factors enunciated in

Cort must control the decision-making process in the

case before us, but fully understanding and properly ap-

plying these factors is no minor task. Our first step in

this inquiry must be to examine briefly the Outer Con-

tinental Shelf Lands Act since it would be fruitless to at-

tempt to deal with the Cort criteria without this

background.

In 1953 Congress enacted the Outer Continental Shelf

Lands Act, 43 U.S.C. § 1331 et seg. This Act asserted

United States’ ownership of and jurisdiction over

minerals in and under the Outer Continental Shelf.“ It

* Continental shelves have been defined as those slightly submerg-

ed portions of the continents that surround all the continental areas

of the earth. They are that part of the continent temporarily

(measured in geological time) overlapped by the oceans. The outer

boundary of each shelf is marked by a sharp increase in the slope of

the sea floor. It is the point where the continental mass drops off

steeply toward the ocean depths. Generally, this abrupt drop occurs

where the water reaches a depth of 100 fathoms or 600 feet. Along the

A-54

also extended the Constitution and laws of the United

States to the shelf lands, and established an exclusive

system of mineral leasing on the Outer Continental

Shelf. Section 1332 of the Act asserts United States

jurisdiction over the Shelf while section 1333 provides

that federal law is applicable on the shelf, applying state

law only as federal law, and only when not inconsistent

with applicable federal law. Section 1334 deals with the

administration of leases, and it grants the Secretary of

the Interior the authority to promulgate regulations in

order to comply with the provisions of the Act relating

to leasing. Section 1334 also prescribes criminal

penalties for any person knowingly and willfully

violating the Act. The rest of the Act, §§ 1335-1343,

deals almost exclusively with the leasing system to be

applied on the Shelf.

[1] Given this brief background, we can now delve

deeper into the history and purpose of the Act as we

analyze it within the framework of the Cort criteria. The

the class for whose especial benefit the statute was

enacted.” The Cort opinion sheds little light on exactly

how to handle this factor. On the one hand, there is

language to the effect that the factor would be satisfied

if the statute created any federal right in favor of the

A-55

plaintiffs, or if there was any sort of pervasive legislative

scheme governing the relationship between the plain-

tiffs’ class (workers on the platforms) and the

defendant’s class (a lessee of rights to resources on or

under the Shelf). Given this interpretation of the

criterion, it would most likely be satisfied in our case.

Section 1333 of the Act deals with what law to apply in

controversies arising on the shelf, and specifically pro-

vides that with respect to disability or death of an

employee as the result of operations on the shelf, the

Longshoremen’s and Harbor Workers’ Compensation

Act shall apply. From this provision alone, it appears

that a federal right has been created in the plaintiffs’

class. However, a reading of the entire Cort opinion leads

one to question whether this is what the Supreme Court

meant when it stated that the plaintiff must be in the

class for whose especial benefit the statute was enacted.

The opinion seems to imply that a cause of action should

not be created unless the primary purpose of the Act (or

at least one of the primary purposes) is to benefit or pro-

tect the workers on offshore oil platforms.’ If this is the

proper interpretation of the Court’s language, then this

criterion would not be satisfied. A review of the

legislative history of the Act outlines specifically the

purposes behind the legislation. The House of Represen-

tatives Report on the bill stated:

This interpretation is based on two points. First, the Supreme

Court made an effort to examine the legislative history of 18 U.S.C. §

610 in order to find the purpose in enacting the legislation, and then

concluded that this legislative history demonstrates that the protec-

tion of ordinary stockholders was at best a secondary concern. 422

U.S. 66, 81, 95 S.Ct. 2080, 2089, 45 L.Ed.2d 26 (1975. The second ra-

tionale for this interpretation is the actual language used by the

Court — is the plaintiff une of the class for whose especial benefit the

statute was enacted.” Standing alone, this language would appear to

mean that unless the primary purpose of the legislation was to benefit

the plaintiff, then no remedy should be implied.

A-56

The purpose of H.R.5134 is to amend the Submerg-

ed Lands Act in order that the area in the outer Con-

tinental Shelf beyond boundaries of the States may be

leased and developed by the Federal Government. At

the present time the Submerged Lands Act merely

established that the seabed and subsoil in the outer

Continental Shelf beyond State boundaries appertain-

ed in the United States and was subject to its jurisdic-

tion and control.

ment of the area by the Federal Government nor are

provisions made for the exchange of State leases for

Federal leases in the same area.

This bill contains provisions to accomplish those

very objectives.

H.R.Rep.No.413, 83d Cong., Ist Sess., 2 (1953). The

report then proceeded to explain the need behind the

1

Representatives of the Federal departments, the

States, and the offshore operators all urged the impor

tance and necessity for the enactment of legislation

enabling the Federal Government to lease for oil and

gas operations the vast areas of the Continental Shelf

outside the State boundaries. They are unanimously

of the opinion, in which this committee agrees, that no

law now exists whereby the Federal Government can

lease those submerged lands, the development and

operation of which are vital to our national economy

and security. It is, therfore, the duty of the Congress

to enact promptly a leasing policy for the purpose of

encouraging the discovery and development of the oil

potential of the Continental Shelf.

A-57

The committee is also of the opinion that legislative ac-

tion is necessary in order to confirm and give validity to

Presidential Proclamation 2667 of September 8, 1945,

wherein the President, by Executive declaration

asserted, in behalf of the United States, jurisdiction,

control, and power of disposition over the natural

resources of the subsoil and seabed of the Continental

Shelf. Many other nations have made assertions to a

similar effect with respect to their continental shelves,

and the committee believes it proper and necessary that

the Congress make such an assertion in behalf of the

United States.

Id. at 2, 3. Similar language was used in the Senate

Report. In explaining the resons why jurisdiction needed

to be asserted over the Shelf, the Report stated:

The discovery of extremely valuable deposits of oil

and gas and probably sulfur in the seabed of the Con-

tinental Shelf off the shores of the United States, as

well as its vast potential as a source for other raw

materials, gave rise to the necessity for protection and

controi of the area and administration of the develop-

ment of its economic wealth, so essential to our

economy in peace or war.

S.Rep.No.411 of the Committee on Interior and Insular

Affairs, 83d Cong., Ist Sess., 7 (1953).

There can be no question that the primary purpose for

this legislation was to assert United States jurisdiction

over the shelf, and to set up a system for the full develop-

ment of its natural resources. Protection of the workers

on the platform, while no doubt a legitimate concern of

Congress, was not a motivating force behind the legisla-

tion, and, in fact, only became relevant if jurisdiction

A-58

was asserted. Therefore, it would not be unfair to say

that protection of these workers, like protection of the

“ordinary stockholder” in Cort, was at best a secondary

concern of the Act.

There is no language in Cort to the effect that all four

criteria must be met in order to imply a cause of action.

Rather, the Court simply said that several factors were

relevant and worthy of consideration. Consequently, it is

not necessary for us to decide which of the above inter-

pretations of the especial benefit language is correct.

We do consider it relevant that protection of these

workers was not the motivating force behind the legisla-

tion, but we also think that it is important that Congress

did feel it necessary to provide certain rights in the Act

to these workers.

The fact that Congress did specify certain remedies in

the Act might, however, indicate an intent by Congress

to deny any other type of civil remedy. This result would

follow if we were to employ the doctrine of statutory con-

struction known as expressio unius exlusio alterius, and

this leads us into the consideration of the second Cort

factor:

[Is there any indication of legislative intent, explicit

or implicit, either to create a remedy or to deny one?

422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26

(1975).

Prior to the Cort opinion, the law appeared to be that if

“legislation expressly provides a particular remedy or

remedies, courts should not expand the coverage of the

statute to subsume other remedies” absent clear con-

A-59

trary evidence of legislative intent. National Railroad

Passenger Corp. v. National Association of Railroad

Passengers, 414 U.S. 453, 458, 94 S.Ct. 690, 693, 38

L.Ed.2d 646 (1974) (Amtrak). The Cort opinion seems to

modify this position somewhat. The statute under

scrutiny in Cort provided for ciminal sanctions, yet the

Court stated that “provision of a criminal penalty does

not necessarily preclude implication of a private cause of

action for damages.” 422 U.S. 66, 79, 95 S.Ct. 2080,

2088, 45 L.Ed.2d 26 (1975). The Cort opinion also dif-

fered from Amtrak in that it stated that absence of any

intention to create a cause of action in the legislative

history would not necessarily preclude implication,

although an implicit or explicit purpose to deny such

cause of action would be controlling.

The controversy before us is significantly different

than the facts before the Supreme Court in Cort. The

Outer Continental Shelf Lands Act not only provides

criminal penalties for violation of the Act (§ 1334(a)(2) ),

but also provides extensive civil remedies. As previously

noted, § 1333(c) provides that the Longshoremen’s and

Harbor Workers’ Compensation Act should apply in

cases of disability or death of an employee working on

the platform, and § 1333(a)(2) provides the workers on

the shelf any remedy which might be available under

state law as long as that remedy is not inconsistent with

federal law. We feel, therefore, that fewer reasons exist

to imply a cause of action in this case than were present

in Cort. The workers on the platform potentially have ex-

tensive civil remedies,* and, keeping in mind that the

A-60

underlying purpose of implication is merely to ffectuate

the goals of Congress, we fail to see how implying this

additional remedy will significantly further the goals

Congress was seeking to accomplish in passing the act.

Therefore, a much stronger argument can be made for

applying the expressio unius exclusio alterius doctrine

here than could be made in Cort, and this argument is

strengthened by language in the legislative history of

the Act which indicates that the plight of the workers

was considered, and that the remedies provided for by

the statute were intended to be the sole solution for this

plight. Senator Cordon, while presenting the reasons to

the Senate for adopting state law in certain situations,

explained that the full development of the estimated

values in the shelf area will require the efforts and the

physical presence of thousands of workers on fixed

structures in the shelf area. Industrial accidents, ac-

cidental death, peace and order” present problems re-

quiring a body of law for their solution. Since as every

member of the Senate knows, the Federal Code was

never designed to be a complete body of law in and of

itself,” the Senate Committee decided that state law

would have to be referred to in some instances. 99

Cong.Rec. 6962-6963 (1952), quoted in Rodrigue v. Aetna

Casualty Co., 395 U.S. 352, 358, 89 S.Ct. 1835, 1838, 23

L.Ed.2d 360 (1969).

The language of Senator Cordon, and the extensive

civil remedies available to the workers, indicates to us a

legislative intent to deny a civil remedy for breach of the

Secretary of Interior’s regulations. If in fact Congress

considered the situation of these workers and set forth

specifically the remedies which it felt would adequately

deal with the situation (and there is every indication that

this is what occurred), then we would indeed be ex-

A-61

ceeding our authority to ignore their will, and, in effect,

legislate our own remedies.

This conclusion does not change as we examine the

third and fourth Cort criteria. The third factor we are to

consider is whether it is consistent with the underlying

purpose of the legislative scheme to imply a remedy for

the plaintiffs. In applying this factor, the Cort opinion

explained that although it is the duty of the courts to

be alert to provide such remedies as are necessary to

make effective the congressional purpose. in this in-

stance the remedy sought would not aid the primary con-

gressional goal.” 422 U.S. 66, 84, 95 S.Ct. 2080, 2090, 45

L.Ed.2d 26 (1975). It is not surprising that the Cort opi-

nion stressed the fact that implying a civil remedy was

not necessary to make effective the congressional pur-

pose. In most cases where cause of actions have been im-

plied, it has been done to remedy the inadequacy of the

express statutory means of enforcement. See, e. g., J. I.

Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12

L.Ed.2d 423 (1964); Gomez v. Florida State Employment

Serv., 417 F.2d 569 (5th Cir. 1969). As in Cort, we fail to

see how it could be argued that the remedies available to

the workers in our case are inadequate. Nor do we feel

that it is necessarily consistent with the legislative goal

of the Act (to fully develop the natural resources of the

Shelf) to impose liability upon a lessee based upon viola-

tion of a departmental regulation when that lessee is ad-

mittedly free from fault.

The final factor which Cort commands us to consider is

whether the cause of action is one traditionally relegated

to state law, in an area basically the concern of the

states, so that it would be inappropriate to infer a cause

of action based solely on federal law. From what we have

A-62

previously stated, it is apparent that Congress, at least,

felt that state law should govern this sort of controver-

sy. Congress reached this conclusion not solely because

there are gaps in the Federal Code, but also because it

recognized that the individual states had a very real in-

terest in the workers on these platforms. As Senator

Long pointed out in his minority report to the Senate:

A typical individual employed in operations in the

shelf area will maintain his family in one of our coastal

parishes; he will own or be buying his house and an

automobile there. His children will attend Louisiana

schools. If either he or a member of his family becomes

ill, he will be cared for by a Louisiana doctor in a Loui-

siana hospital. After his employment in the shelf ends,

he will continue to live in Louisiana and will spend his

old age there.

The children of these employees will attend a free

public school, and be provided with free schoolbooks,

supplies, iunches, and transportation. Our highways

and streets will be traveled by both employer and

employee. The State provides charity hospitals for the

indigent sick. Care for those stricken with tuber-

culosis or mental diseases is provided by State-

operated hospitals. A State-financed medical school

now provides many of the doctors who will minister

unto these people. The worker’s person and property

will be protected by our police. He will be protected

from disease and sickness by our public health and

sanitation offices. His elderly parents are likely to be

— a pension during their period of nonproduc -

vity.

A-63

Louisiana provides a system of courts in which the

employee will litigate many of his claims.

Many of these same services will be provided for the

oil company whose base of operations will be

necessarily on Louisiana soil. The company will use

our highways, will benefit from police protection, and

make use of our courts.

None can deny that the furnishing of such services

to the thousands of shelf workers, their families, and

the companies for which they work will be a heavy

financial burden on the State and its subdivisions.

S.Rep.No.411 of the Committee on Interior and insular

Affairs, 83d Cong., Ist Sess., 66, 67 (1953). We think that

it is apparent, therefore, that this controversy should be

controlled by state law. The concern of the state for

these workers is real, and this concern was recognized

and provided for by Congress in the actual provisions of

the Act.

We are aware of the fact that brevity is not the chief

attribute of this decision. We have gone to some lengths

to explain ourholding because of the many lives and for-

tunes involved. Development of the Outer Continental

Shelf will continue for generations, and, indeed, seems to

be gaining added importance. All involved in these vital

activities, employers and employees, have a right to

know the rules. Having reached this point, there is

much left to be resolved including the applicable state

law.

A-64

III. LOUISIANA LAW

[2] Having determined that federal law requires the

plaintiffs to look to state law for redress, we now turn to

plaintiffs alternative theory that Shell is strictly liable

for the injuries sustained pursuant to Article 2322 of the

Louisiana Civil Code. Article 2322 provides:

The owner of a building is answerable for the

damage occasioned by its ruin, when this is caused by

neglect to repair it,* or when it is the result of a vice in

its original construction.

The text of Article 2322 reveals that several threshold

issues must be considered before liability under the Arti-

cle can accrue. The parties to the appeal have vigorously

contested the meaning of “owner”, “building’’, and

ruin! as applied to the facts of this case.“

* “Neglect to repair means failure to keep in repair and does not

require a showing of negligence. See Adamson v. Westinghouse Elec-

tric Corp. 236 So.2d 556 (La.App. 1970).

Shell Oil Company contends that it cannot be held strictly liable

pursuant to Article 2322 because it did not own the modular drilling

rig containing the hot water heater which was placed upon the plat-

form, not did it own the soil upon which the platform was placed.

Shell also contends that, in effect, the hot water heater which -

ed in this case is not an immovable by attachment within the

of Cothern v. La Rocca, 255 La. 673, 232 So.2d 473 (1970) because the

hot water heater was not placed on the premises by the owner of the

building as required by Article 467 of the Louisiana Code. The Court

A-65

The main issue of contention between the parties,

however, is the purely legal question of whether an

owner of an offshore drilling platform can be held strict-

ly liable pursuant to Article 2322 for injuries sustained

by employees of an independent contractor present on

the platform for the purpose of conducting drilling

operations. The district court denied recovery, holding

that an employee of an independent contractor can not

recover under Article 2322 unless performance of the

work on the owner's premises is intrinsically

dangerous.“

meaning of Cothern because it was attached in such a way that burn-

ing and cutting would be required to remove it. In addition, plaintiffs

rely upon Article 464 of the Louisiana Code in support of thier conten-

tion that the drilling rig is an immovable by attachment. Article 464

provides:

Lands and buildings or other constructions, whether they have

their foundation in the soil or not, are immovable by their nature. Ar-

ticle 464 has been interpreted to exclude the requirement that other

construetions be placed upon the premises by the owner. See Hilltop

Bowl, Inc. v. United States Fidelity & Guaranty Co., 248 F.Supp. 572

(D.C.W.D.La. 1966); Louisiana v. Illinois Central Railroad Company,

256 So.2d 819 (La.App. 1972), cert. denied 260 La. 1136, 258 So.2d

381 (1972).

The plaintiffs also contend that the ruin was catastrophic and

was caused by Shell's neglect to repair an appurtenance of the struc-

ture. The plaintiffs assert that it is irrelevant that Shell's ‘neglect to

repair was caused by a breach of duty by Movible Offshore, Inc.

The Court stated in pertinent part:

Louisiana law is consistently to the effect that an injury to the

employee of an independent contractor, caused by the contractor's

i , does not impose strict liability on the building owner.

Henson v. Traveler's Ins. Co. 208 So.2d 366 La. App. 1968), and cases

cited therein. The only relevant exception appears to be where the

contract directly requires the of a work intrinsically

dangerous, however skillfully performed. Vinton Petroleum Co. v. L.

Seiss Oil Syndicate, 19 L. App. 179 182] 139 So.2d [139 S.] 543, 545

(1932).

Minute Entry of Trial Court, May 14, 1973 (R.503, 504).

A-66

If the theory of the plaintiffs’ action against Shell was

liability for the negligent acts of an indepencent contrac-

tor under the doctrine of respondeat superior, our task

would not be nearly as difficult. In Cole v. Louisiana Gas

Co., 121 La. 771, 46 So. 801 (1908), the Louisiana

Supreme Court long ago held that:

The general rule is that the servants of an indepen-

dent contractor must look to him (and not to the per-

son with whom he has contracted) for injuries which

they receive through his fault or negligence.

Id. at 779, 46 So. at 804. An exception to the general

rule, as recognized in Cole, will arise if the work is in-

herently dangerous.

The theory of the plaintiffs’ action, however, is not

that Shell is liable for the acts of its independent contrac-

tor under the doctrine of respondent superior, but rather

that Article 2322 imposed a strict statutory responsibili-

ty upon Shell to keep the platform and the ap-

purtenances thereto free from ruin. Since the basis of the

plaintiffs claim for damages in this case is strict liability,

rather than negligence or respondeat superior, our in-

quiry must go beyond Cole.

The district court cited the cases of Vinton Petroleum

Co. v. L. Seiss Oil Syndicate, Inc., and Henson v.

Traveler’s Ins. Co.,“ in support of its conclusion that

Sheil is not liable to the plaintiffs under Article 2322. We

are of the opinion that these cases are not dispositive of

the issue and that a brief analysis of Louisiana

jurisprudence will demonstrate the absence of clear and

controlling precedent.

19 La. App. 179, 139 So. 543 (1932).

208 So.2d 366 (La. App. 1968), cert. denied, 252 La. 174, 210

So.2d 55 (1968).

— ¶ͤ —‚

A-67

Although both Vinton and Henson are cases involving

claims under Article 2322, whether these cases support

the holding of the district court is indeed uncertain. The

Vinton case involved damage to the property of an ad-

joining property owner and not injury to an employee of

an independent contractor. In addition, there is ambigui-

ty in Vinton as to whether the Louisiana appellate court

extended the general rule that an owner is not responsi-

ble for the acts of an independent contractor to cases in-

volving Article 2322 strict liability.“

In Henson, an employee of an independent contractor

was injured when he stepped in an unattended piling

hole at a construction site. Although the injured

employee in Henson did assert a claim based upon Arti-

cle 2322 against the owner of the property, the plaintiffs

argue that a simple negligence count was also asserted

against the owner. The plaintiffs contend that Article

2322 is inapplicable because a hole in the ground is ob-

In Vinton, the owner of an oil derrick hired a man named Buton

to dismantle the derrick on his property. In the dismantling process,

the derrick collapsed causing damage to the adjoining property owner

(the plaintiff in this case). The plaintiff asserted a count based upon

simple negligence and a count based upon Article 2322. The defen-

dant denied all allegations in the complaint and further alleged that

Burton was an independent contractor. The Court in the following se-

quence, made three findings:

(1) Burton was not an independent contractor so the landowner

could not prevail on the defense to the negligence count.

(2) The plaintiff sustained his burden of proof under Article

2322 of establishing that the derrick was in a rotten or decayed

condition at the time of the collapse.

(3) Even if Burton was an independent contractor, the defendant

landowner would still be liable because the work was intrinsic-

ally dangerous.

The third holding sequentially follows the second holding but

logically relates to the holding on the issue of negligence, not the

holding on the issue of the condition of the building. If the

third holding relates to the first „ Vinton clearly does not app-

ly the independent contractor rule, and the intrinsically dangerous ex-

ception thereto, to Article 2322.

A-68

viously not an appurtenance of a building within the

meaning of Article 2322,'* and, therefore, the discussion

in the case as to the liability of the owner to the injured

employee deals with the negligence count.

Although we do not go so far as to accept the plain-

tiffs’ interpretation of Henson, we are of the opinion that

the holding of the Louisiana appellate court is unclear in

light of the fact that there is uncertainty as to whether

Article 2322 is applicable to facts in that case. More im-

portantly, the discussion of liability in Henson deals

with the issue of whether an owner is responsible under

Article 2322 for the negligence of an independent con-

tractor, and not whether an owner can be held strictly

liable under Article 2322 for ‘neglect to repair” as a

separate theory of liability independent of any fault or

negligence of the contractor.

Resolution of the issue of whether Shell is strictly

liable to the plaintiffs in this case is further clouded by

the case of Temple v. General Ins. Co. of America, 306

So.2d 915 (La.App.1974), cert. denied, 310 So.2d 643

(1975). The Temple Court found that because of a sub-

contractor’s employee sustained his injuries while in the

process of repairing a building, the ruin did not occur

from “neglect to repair within the meaning of Article

The plaintiffs in their reply brief reason as follows:

Wo perceive this to be the narrow issue which the plaintiffs raise

on appesl. See, e.g. Camp v. Church Wardens of the Church of St.

Louis, 7 La.Ann. 321, 325 (1852).

— gene wer:

— re

——

A- 69

2322. Although the court expressly found that Article

2322 did not apply, the court proceeded to set forth what

it deemed to be the determinative issue in a case involv-

ing injury to an employee of an independent contractor

The court stated:

The question of concern is whether the owner was in

control of the premises or the contractor who was per-

forming work of laying the bricks which fell causing

injury to plaintiff. The answer appears obvious. Cer-

tainly the subcontractor, J. R. McFarland, d /b /a

United Masonry Company, had control of the wall as

the construction was not complete. A workman was

working on the wall at the moment it fell. The

evidence shows that a workman was striking the

joints of the courses of brick when the newly con-

structed wall began to fall around him. Such a cir-

cumstance does not bring the injured plaintiff within

the statutory liability imposed on the owner by

LSA—C.C. Article 2322, and Article 670.

„ In Daroca v. Metropolitan Life Ins. Co., 121 F.2d 917 (5th Cir.

1941), an employee of an independent contractor was injured while

working on the owner’s premises. The Court stated:

Plaintiff was neither a tenant nor a third person lawfully, but ac-

cidentally, on the premises nor a passerby. He was a workman engag-

ed in making repairs to the building, employed for the very purpose of

with the owner's duty to keep his building in repair. As to

him there is no doubt whatever the owner was not responsible for any

of an indepéndent contractor. Camp v. Church Wardens, 7

La. Ann.321; Peyton u. Richards, 11 La. Ann. 62; Burton v. Davis, 15

La. Ann. 448; Gallagher u. Sourhwestern Exposition Ass'n, 28 La.

Ann. 943; Robideaux v. Hebert, 118 La. 1089, 43 So. 887, 12

L.R.A.N.S., 632. It is evident appellant can not recover on his first

alleged cause of action.

Id. at 919. Shell has argued that Daroca is authority for denial of

recovery by an employee of an independent contractor pursuant to

Article 2322 under all circumstances. The tiffs counter by argu-

ing that Daroca may deny recovery only when the employee is on the

premises for the very purpose of repairing those premises. See Har-

rison v. Blueberry Hill, 265 F.2d 730 (rd Cir. 1958).

A-70

Counsel has not cited to us any case which holds

these coda! articles applicable to the construction or

repair of a building. We find no liability herein. See,

Daroca v. Metropolitan Life Insurance Comapny, 5

Cir., 121 F.2d 917; and Matthews v. Southern Amuse-

ment Company, La.App., 199 So.2d 403 (La.App. 3rd

Cir. 1967).

Id. at 917, 918.

The Court of Appeals in Temple thus placed great em-

phasis upon control of the premises, an issue not ex-

pressly considered in Henson.“ Furthermore, the em-

phasis upon control of the premises in Temple is concep-

tually inconsistent with other Louisiana case law pro-

viding that absent an agreement whereby a lessee

assumes responsibility, a lessor-owner can be held strict-

In Camp v. Church Wardens of the Church of St. Louis, 7

La. Ann. 321 (1852), the Chief Justice of the Louisiana Supreme Court

stated that an owner was liable pursuant to Article 2302 of the Loui-

siana Code (the predecessor of Article 2322 and indentical in wording)

for injuries sustained by an employee of a contractor on the premises.

The owner had retained substantial supervisory authority over the

work of the employees of the contractor doing the repairs. The finding

of liability, however, was not premised upon the control retained by

the owner. The Chief Justice stated:

These provisions are entirely independent of the general rules con-

cerning the responsibilities of masters and employers, and not in

any manner connected with their relations, is shown conclusively

by their place in the code. These articles are in the same chapter,

and follow immediately that which provides for the latter, which is

numbered 2299. They are evidently founded in an enlightened view

of public necessity. They protect the neighbor; the passenger in the

street; and it would be singular, indeed, if the men at work at the

building were excluded from their just and salutory operation.

Id. at 325. Justice Slidell, in his concurring opinion, took a different

approach. He emphasized the continuous and active control over the

work by the owner. Id. at 326. See also Faren v. Sellers, 39 La. Ann.

1011, 3 So. 363 (1888).

A-71

ly liable under Article 2322 for injuries sustained by

employees of the lessee, regardless of whether actual

control of the premises is retained by the lessor. See, e.

g., Hornsby v. Ray, 327 So.2d 146 (La.App. 1976), cert.

denied, 330 So.2d 293 (La.1976); 330 So.2d 319

La. 1976).

We have surveyed Louisiana law as presented by the

briefs of counsel and as gathered from our own research,

and we have concluded that there is no clear and con-

trolling precedent from Louisiana’s highest court to

resolve several of the issues presented by this appeal.

The issue which we perceive as most perplexing is

whether Shell has available to it an independent con-

tractor defense. We hesitate to accept Shell’s argument

and its interpretation of the Henson and Vinton cases,

because of what appears to be a theoretical inconsisten-

cy between the imposition of a strict liability standard

on a building owner, and at the same time providing an

independent contractor defense which developed

primarily in response to negligence actions and

respondeat superior liability. Because the Supreme

Court of Louisiana is the final expositor of Louisiana

law, we feel compelled to certify the significant ques-

The plaintiffs have also cited the case of McIlwain v. Placid Ol

Co., 472 F.2d 248 (5th Cir. 1973), in support of their contention that

Shell be held strictly liable. Although McIlwain is factually similar to

the present case, the issue of whether the owner can be held strictly

liable to an employee of an independent contractor pursuant to Arti-

cle 2322 was not considered on appeal. Viewed most favorably to the

plaintiffs, McIlwain implies that an owner can be held strictly liable

to employees of an independent contractor under Article 2322. Mell.

wain fails, however, to set forth supportive precedent or rationale,

and serves to further render the issue unclear in light of the

authorities cited herein.

A-72

tions requiring state law determination to that court.”

We perceive these issues to include the following:

PROPOSED ISSUES TO BE CERTIFIED

(1) Whether the owner of an offshore drilling platform

can be held strictly liable pursuant to Article 2322 of

the Lousiana Civil Code absent the existence of intrin-

sically dangerous work and absent the exercise of con-

trol of the premises — when employees of an indepen-

dent contractor hired by the owner are injured while

on the platform by the explosion of a hot water heater

located in the living module which caused part of the

platform to fall or collapse, and when the employees

are on the platform for the purpose of conducting drill-

ing operations and not for the purpose of repairing or

constructing the platform or any appurtenances or at-

tachments thereto.

(2) Assuming that an owner cannot be held strictly

liable to employees of an independent contractor

without the existence of an intrinsically dangerous ac-

tivity, whether drilling for oil on an offshore drilling

platform constitutes intrinsically dangerous work

within the meaning of Vinton Petroleum Co. v. L.

Seiss Oil Syndicate, Inc., 19 La.App. 179, 139 So. 543

(Ust Cir. 1932), and as applied to Article 2322 of the

Louisiana Civil Code.

(3) Whether injuries sustained by an employee of an

independent contractor are the result of “ruin’’ of the

We recognize the wisdom of utilizing the certification procedure

and are merely attempting to stay within the wake of our own Ad-

miral (Chief Judge Brown) who is currently aboard the S. S. Certifica-

tion in route to Georgia, Florida and heavens knows where else. See

In Re McClintock, 558 F.2d 732 (5th Cir. 1977); Phillips u. Iglehart,

558 F.2d 737 (5th Cir. 1977). Certification to the Louisiana Supreme

Court is provided for by La.Rev.Stat.Ann. $ 13:72.1 and Rule 12 12 of

the Rules of the Louisiana Supreme Court.

—— — — —— H—

A-73

building within the meaning of Article 2322 of the

Louisiana Civil Code, when the fall or collapse of the

building is caused by the explosion of a hot water

heater attached to the living module f the platform.

(4) Whether a modular and movable drilling rig which

is attached to an offshore drilling platform in such a

manner that cutting and burning would be required to

remove it, and which is not owned by the owner of the

platform to which it is attached, constitutes an im-

movable by attachmen” within the meaning of

Cothern v. La Rocca, 255 La. 673, 232 So.2d 473, 477

(1970), and as applied to Article 2322 of the Louisiana

Civil Code.

(5) Whether an owner of an offshore drilling platform

can be held strictly liable pursuant to Article 2322 of

the Louisiana Civil Code for injury sustained upon the

platform, even though ownership of the underlying

soil is not vested in the owner of the platform.

In accordance with the practice of the court, the clerk

wil be instructed to seek the cooperation of counsel in

formulating the precise questions to be certified. We

recognize that there are several issues which have been

raised with regards to indemnification that are still

unresolved. These issues, however, become pertinent on-

ly if liability is placed upon Shell Oil Company.

Therefore, we will reserve discussion of these issues until

we have completed the certification process and the

Supreme Court of Louisiana has had a chance to answer

the questions so certified. If they should determine that

Shell is liable under Louisiana law, we shall endeavor to

answer the indemnification questions as expeditiously

as possible. If Shell is not liable these questions become

moot.

A-74

APPENDIX D

DENIALS OF REHEARING EN BANC

UNITED STATES COURT OF APPEALS

Fifth Circuit

DENIALS OF REHEARING EN BANC

(Rule 35 Federal Rules of Appellate Procedure; Local

Fifth Circuit Rule 12)

Group 1 — Denials where no member of the panel nor

Judge in regular active service on the Court

requested that the Court be polled on rehear-

ing en banc.

Group 2 — Denials after a poll requested by a member

of the panel or a Circuit Judge in regular ac-

tive service.

Group 3 — Denials on the Court’s own motion after a

poll requested by a member of the panel or a

Circuit Judge in regular active service.

23 = —

A- 75

Docket

Title Number

GROUP i

Argonaut Ins. Co. v.

D 75-4019

Booker v. Shell Oil Coo. 75-4019

Carvin v. Shell Oil Co. o. 75-4019

Dollar v. Long Mfg., N. C., Inc. .... 76-1018

Long Mfg., N. C., Inc. v.

Nichols Tractor Co., Inc......... 76-1018

Olsen v. Shell OilCo ............. 75-4019

Shell Oil Co. v.

Argoneut Ins Coo. 75-4019

Shell Oil Co. v. Teledyne Movible

r wank vcxedas 75-4019

Stewart v. Bailey ................ 75-2996

Teledyne Movible Offshore, Inc.

v. Argonaut Ins.Co............. 75-4019

60 76-1401

n 76-2258

r 77.1685

Wallace v. Shell Oil Co. 75-4019

GROUP 2

Equal Employment Opportunity

Commission v. D.H.

Holmes Col, Ltd................ 76-4184

Neidhardt v.

D.H. Holmes Co., Ltd........... 76-4184

Date of

Denial

12) 1/77

12/ 1/77

12/ 1/77

11/30/77

11/30/77

12) 1:77

12/ 1/77

12/ 1/77

12/ 7/77

12/ 1/77

12, 5/77

1128/77

1128/77

12/ 1/77

12/ 5/77

12, 5/77

Citation of

Panel Decision

E.D.La., 561

F.2d 1178

E.D.La., 561

F.2d 1178

E.D.La., 561

F.2d 1178

M.D.Ga., 561

F.2d 613

M.D.Ga., 561

F.2d 613

E.D.La., 561

F.2d 1178

E.D.La., 561

F.2d 1178

E.D.La., 561

F.2d 1178

N.D.Ala., 561

F.2d 1195

E.D.La., 561

F.2d 1178

S.D.Fla., 559

F.2d 1339

S. D. Fla. 561

F. 2d 1160

S. D. Tex., 562

F. 2d 1259

E. D. La., 561

F. 2d 1178

E. D. La., 556

F. 2d 787

E. D. La., 556

F. 2d 787

A-76

APPENDIX E

Mary OLSEN, Plaintiff-Appellant

Cross Appellee,

v.

SHELL OIL COMPANY et al., Defendants-

Appellees Cross Appellants,

v.

ARGONAUT INSURANCE COMPANY,

Intervenor-Appellant.

Christine W. CARVIN, Plaintiff-Appellant

Cross Appellee,

v.

SHELL OIL COMPANY et al., Defendants -

Third - Party Plaintiffs Appellees- Cross Appellants,

v.

TELEDYNE MOVIBLE OFFSHORE, INC., et al.,

Third-Party Defendants-Appellees Cross Appellants,

Argonaut Insurance Company,

Intervenor-Appellant.

Frank Winston BOOKER et al.,

Plaintiffs-Appellees,

v

SHELL OIL COMPANY et al.,

Defendants-Appellants.

Gordon Davis WALLACE, Plaintiff-Appellant

Cross Appellee,

v.

SHELL OIL COMPANY et al., Defendants-

Appellees Cross Appellants,

v.

ARGONAUT INSURANCE COMPANY,

Intervenor-Appellant.

—— — —

A- 77

ARGONAUT INSURANCE COMPANY,

Plaintiff-Appellant Cross Appellee,

v.

SHELL OIL COMPANY et al., Defendants-

Appellees Cross Appellants.

No. 75-4019.

United States Court of Appeals,

Fifth Circuit.

May 12, 1978.

Rehearing Denied June 14, 1978

Consolidated appeals were taken from orders of the

United States District Court for the Eastern District of

Louisiana, Frederick J. R. Heebe, Chief Judge. The

Court of Appeals, Fay, Circuit Judge, held that the court

would certify to the Supreme Court of the State of Loui-

siana questions relating to the applicability of a provi-

sion of the Louisiana Civil Code in determining whether

the owner of an offshore oil drilling platform can be held

strictly liable for injuries sustained by employees of an

independent contractor.

Question certified.

Federal Courts 392

Court of Appeals certified to Supreme Court of State

of Louisiana questions relating to whether owner of off-

shore drilling platform could be held strictly liable to

employees of independent contractor pursuant to provi-

sion of Louisiana Civil Code absent existence of intrin-

sically dangerous work and absent control of premises,

whether offshore oil drilling constitutes ‘intrinsically

dangerous work,’’ whether injuries sustained by

employee of independent contractor are result of ruin

of building when caused by explosion of hot water heater

attached to living module of platform, whether modular

A-78

drilling rig attached to platform but not owned by owner

of platform constitutes an “immovable by attachment.“

and whether owner of platform could be held strictly

liable for injuries sustained upon it even though owner-

ship of underlying soil was not vested in platform owner.

LSA—C.C. art. 2322.

Wm. P. Rutledge, Lafayette, La., for Olsen, et al.

Joel L. Borrello, New Orleans, La., for Argonaut Ins.

Co.

Donald A. Hoffman, New Orleans, La., for Pacific

Employers Insurance Co.

John O. Charrier, Jr., New Orleans, La., for Shell Oil

Co.

W. K. Christovich, Charles W. Schmidt, III, New

Orleans, La., for Teledyne Movible.

Francis G. Weller, New Orleans, La., for Wiegand Co.

& Thermo-Disc., Inc.

Patrick T. Caffery, W. Eugene Davis, New Iberia, La.,

for Texsteam Corp.

Consolidated Appeals from the United States District

Court for the Eastern District of Louisiana.

Before GOLDBERG and FAY, Circuit Judges, and

DUMBAULD, District Judge.*

*District Judge for the Western District of Pennsylvania, sitting by

A-79

FAY, Circuit Judge:

We have concluded that this appeal presents impor-

tant issues of Louisiana law which we believe are ap-

propriate for resolution by the Supreme Court of Loui-

siana. Our final decision in this matter will therefore be

deferred pending certification of the issues to the

Supreme Court of Louisiana.

We have requested that the parties submit a proposed

agreed statement of facts and certificate of issues for

decision pursuant to our general practice. See West v.

Caterpillar Tractor Co., Inc., 504 F.2d 967 (5th Cir. 1974).

CERTIFICATION FROM THE UNITED STATES

COURT OF APPEALS FOR THE FIFTH CIRCUIT

TO THE SUPREME COURT OF LOUISIANA PUR-

SUANT TO LA.REV.STAT.ANN. § 13:72.1 AND

RULE 12 OF THE RULES OF THE LOUISIANA

SUPREME COURT.

It appears to the Unites States Court of Appeals for

the Fifth Circuit that the above-styled case in this court

involves questions or propositions of the law of the State

of Louisiana which are determinative of this cause, and

there appear to be no clear, controlling precedents in the

decisions of the Supreme Court of the State of Louisiana.

This Court certifies the following questions of law to the

Supreme Court of Louisiana for instructions concerning

said questions of law, such case being on appeal from the

United States District Court for the Eastern District of

Louisiana.

A-80

I. STYLE OF THE CASE

The style of the case in which this certification is made

is Mary Olsen, et al., Plaintiffs-Appellants, versus Shell

Oil Company, et al., Defendants-Appellees; Christine W.

Carvin, et al., Plaintiffs-Appellants, versus Shell Oil

Company, et al., Defexdants-Appellees; Gordon Davis

Wallace, Plaintiff-Appellee, versus Shell Oil Company,

et. al., Defendants-Appellees; and Argonaut Insurance

Company, Plaintiff-Appellant, versus Shell Oil Com-

pany, et al., Defendants-Appellees, Case No. 75-4019,

United States Court of Appeals for the Fifth Circuit, on

appeal from the United States District Court for the

Eastern District of Louisiana.

II. STATEMENT OF THE FACTS

A complete statement of the facts of this case, show-

ing the nature of the case and the circumstances out of

which the questions or propositions of law arise, can be

found at 561 F.2d 1178, 1180, and will not be set forth in

full in this certification.

III. QUESTIONS FOR THE SUPREME

COURT OF LOUISIANA

The parties have been unable to agree on the precise

questions for certification. We have concluded that the

following questions delineate the issues and accordingly

certify them to the Supreme Court of the State of Loui-

siana.

(1) Whether the owner of an offshore drilling platform

can be held strictly liable pursuant to Article 2322

of the Louisiana Civil Code absent the existence of

intrinsically dangerous work and absent the exer-

A-81

cise of control of the premises — when employees

of an independent contractor hired by the owner

are injured while on the platform by the explosion

of a hot water heater located in the living module

which caused part of the platform to fall or col-

lapse, and when the employees are on the platform

for the purpose of conducting drilling operations

and not for the purpose of repairing or construc-

ting the platform or any appurtenances or at-

tachments thereto.

(2) Assuming that an owner cannot be held strictly

liable to employees of an independent contractor

without the existence of an intrinsically dangerous

activity, whether drilling for oil or an offshore drill-

ing platform constitutes “intrinsically dangerous

work within the meaning of Vinton Petroleum Co.

v. L. Seiss Oil Syndicate, Inc., 19 La. App. 179, 139

So. 543 (Ist Cir. 1932), and as applied to Article

2322 of the Louisiana Civil Code.

(3) Whether injuries sustained by an employee of an

independent contractor are the result of ruin of

the building within the meaning of Article 2322 of

the Louisiana Civil Code, when the fall or collapse

of the building is caused by the explosion of a hot

water heater attached to the living module of the

platform.

(4) Whether a modular and movable drilling rig which

is attached to an offshore drilling platform in such

a manner that cutting and burning would be re-

quired to remove it, and which is not owned by the

owner of the platform to which it is attached, con-

stitutes and “immovable by attachment within

A-82

the meaning of Cothern v. La Rocca, 255 La. 673,

232 So.2d 473, 477 (1970), and as applied to Article

2322 of the Louisiana Civil Code.

(5) Whether an owner of an offshore drilling platform

can be held strictly liable pursuant to Article 2322

of the Louisiana Civil Code for injury sustained

upon the platform, even though ownership of the

underlying soil is not vested in the owner of the

platform.

A-83

APPENDIX F

Mary OLSEN, Plaintiff,

V.

SHELL OIL COMPANY, Defendant.

No. 62522.

Supreme Court of Louisiana.

Nov. 16; 1978.

As Corrected on Rehearing Denied

Jan. 26, 1979.

Questions of state law were certified by the United

States Court of Appeals for the Fifth Circuit. The

Supreme Court, Tate, J., held that: (1) fixed offshore

drilling rig was “building” within meaning of statute im-

posing liability upon building owner to persons injured

through its ruin whether due to vice in original construc-

tion of building or through owner’s neglect to repair it;

(2) owner of rig was owner, for purposes of statute, of

defective modular living unit attached to drilling rig; (3)

explosion of water heater within modular living unit con-

stituted ruin of building within meaning of statute; (4)

rig Owner was not exculpated from liability for injuries

and death caused by explosion on ground that damages

were caused by fault of third person, and (5) rig owner’s

liability was not affected by fact that underlying soil

upon which rig rested was owned by another party.

Certified questions answered.

Dixon, J., concurred and filed opinion.

Sanders, C.J., dissented and assigned written reasons.

Summers, J., dissented.

NN

A-84

Marcus, J., dissented and filed opinion.

Summers, C.J., and Marcus, J., would grant applica-

tion for rehearing.

1. Negligence 44

Owner’s fault, under statute imposing liability upon

owner of building to persons injured through its ruin, is

founded upon breach of his obligation to maintain or

repair his building so as to avoid creation of undue risk

of injury to others; owner is absolved from his strict

liability neither by his ignorance of condition of building,

nor by circumstances that defect could not easily be

detected; he is absolved from such liability only if the

thing owned by him falls, not because of its defect, but

rather because of fault of some third person or of person

injured thereby, or because fault is caused by irresistible

cause or force not usually foreseeable. LSA—C.C. arts.

2322, 3556, subds. 14, 15.

2. Negligence 44

As regards term “building,” for purposes of statute

imposing liability upon owner of building to persons in-

jured through its ruin, inherent requirement is that there

be a structure of some permanence; permanent structure

need not be intended for habitation for it to be con-

sidered a building. LSA—C.C. art. 2322.

See publication Words and Phrases for other judicial con-

structions and definitions.

A-85

3. Negligence 44

Fixed offshore drilling platform which had foundation

in the soil was building for purposes of statute impos-

ing liability upon owner of building to persons injured

through its ruin, whether or not intended for habitation.

LSA—C.C. art. 2322.

4. Negligence 44

Necessary appurtenances to structures and movables

made immovable by attachment, which are defective or

have fallen into ruin, also may be included within term

building for purposes of statute imposing liability

upon owner of building to persons injured through its

ruin. LSA—C.C. art. 2322.

5. Negligence 44

In absence of another statute providing otherwise,

strict liability imposed by statute upon owner of

building for harm caused by defects in its structures or

appurtenances imposes nondelegable duty upon owner

to keep his building and appurtenances in repair and to

be responsible to third persons for harm caused by any

defect in structure or its appurtenances. LSA—C.C. art.

2322.

6. Negligence 54

As regards statute imposing liability upon owner of

building to persons injured through its ruin, building

owner, by contractual agreement between himself and

occupant who owns appurtenance incorporated into

structure of building, may regulate their relative owner-

A-86

ship or duties of indemnification to one another resulting

from injury to third persons; owner cannot by such con-

tract, however, limit his law-imposed liability to third

persons for unjuries arising from premise defects; for

same reasons, neither can he, by contractual agreement

relating to ownership of appurtenant parts by occupier,

absolve himseif from liability to third person from in-

jurie. resulting from premise defect in any part of his

premises, including in occupierowned appurtenant

parts attached to his building so as to become a part of

it. LSA—C.C. art. 2322.

7. Negligence 54

Owner of fixed offshore drilling rig was owner of rig

and of modular living unit which was attached to rig and

in which explosion causing injuries and death to third

persons took place, for purposes of statute imposing

liability upon owner of building to persons injured

through its ruin, notwithstanding rig owner’s contrac-

tual relationship with drilling contractor which, as bet-

ween those two parties, remained owner of modular liv-

ing unit. LSA—C.C. art. 2322.

See publication Words and Phrases for other judicial

constructions and definitions.

8. Negligence 44

Explosion of water heater within modular living unit

attached to offshore drilling rig was ruin of drilling rig

within meaning of statute imposing liability upon owner

of building to persons injured through its ruin whether

caused by neglect to repair building or by a vice in its

original construction, notwithstanding contention that

explosion was caused by negligent failure of occupier of

modular living unit to install correct valve in water

heater. LSA—C.C. art. 2322.

See publication Words and Phrases for other judicial

constructions and definitions.

A-87

9. Negligence 62(3)

Owner of building may be exculpated from liability

under statute imposing liability upon building owner to

persons injured through its ruin for premise defect if vic-

tim is injured not by reason of defect but instead

because of fault of some third person. LSA—C.C. art.

2322.

10. Negligence 62(3)

Building owner’s agreement with or reliance upon con-

tractor or tenant to perform owner’s nondelegable duty

to keep his building in repair and free of defect con-

stituting unreasonable risk of injury to others does not

constitute that contractor or tenant a third person for

purposes of exculpation of building owner from

statutory liability for premise defect if victim is injured

not by reason of defect but instead because of fault of

some third person. LSA—C.C. arts 670, 2322. |

See publication Words and Phrases for other judicial

constructions and definitions.

11. Negligence 62(3)

Fault of “third person” which exonerates building

owner from his own obligation importing strict liability

as imposed by statute making building owner liable to

persons injured through ruin of building and by other

statutes is that which is sole cause of the damage, of the

nature of an irresistible and unforeseeable occurence,

that is, where damage resulting has no casual relation-

ship whatsoever through fault of owner in failing to keep

his building in repair, and where third person is

stranger rather than person acting with consent of

owner in performance of owner’s nondelegable duty to

5 his building in repair. LSA C. C. arts. 2317, 2321,

A-88

12. Negligence 62(3)

Principle that building owner may be exculpated from

liability under statute imposing liability upon building

owner to persons injured through its ruin for premise

defect if victim is injured not by reason of defect but in-

stead because of fault of some third person was inap-

plicable to owner of fixed offshore drilling rig, which

asserted that it was exculpated from liability to third

persons injured by explosion which took place within

modular living unit attached to drilling rig on ground

that damages were in fact caused by intervening fault of

drilling contractor which occupied modular living unit

and which negligently failed to repair defective water

heater valve which caused explosion. LSA—C.C. arts.

2317, 2321, 2322.

13. Negligence 44

Liability of owner of fixed offshore drilling rig under

statute imposing liability upon building owner to per-

sons injured through its ruin was not affected by cir-

cumstance that underlying soil upon which building rig

rested was owned by another party. LSA—C.C. arts.

464-464 comment, 2320, 2322.

William P. Rutledge, Domengeaux & Wright,

Lafayette, for plaintiff.

John O. Charrier, Jr., Jones, Walker, Waechter, Poite-

vent, Carrere & Denegre, W.K. Christovich, Charles W.

Schmidt, III, Christovich & Kearney, Patrick T. Caffery,

Caffery, Duhe, Oubre & Gibbons, New Iberia, for defen-

dant.

Douglas A. Molony, Bernard J. Caillouet, Gene S.

Palmisano, M. Truman Woodward, Jr., H.H. Hillyer, Jr.,

:

A-89

Wilson S. Shirley, Jr., James K. Irvin, M. Hampton,

Carver, W. Richard House, Jr., Milling, Benson, Wood-

ward, Hillyer & Pierson, New Orleans, amicus curiae for

Chevron U.S.A., Inc. and Exxon Corp.

TATE, Justice.

The United States Court of Appeals for the Fifth Cir-

cuit certified to us for our opinion certain questions of

state law. Olsen v. Shell Oil Co., 561 F.2d 1178 (1977).

Ther certification was in accordance with the procedure

authorized by La.R.S. 13:72.1 (1972) and Rule 12, Rules

of the Supreme Court of Louisiana (1973).

Certain employees of a drilling contractor (Movible)

were killed or injured, and they or their representatives

sue to cover damages thereby sustained. As set forth

more fully in Appendix 1 to this opinion:

The injuries and deaths resulted from the explosion of

a water heater aboard a fixed drilling platform owned by

Shell Oil Company situated in the Gulf of Mexico off-

shore of Louisiana. Pursuant to a drilling contract with

Shell, Movible had attached (in such a way that burning

and cutting of metal would be required to remove it) its

modular drilling rig onto the platform, and a modular liv-

ing unit to house Movible’s drilling employees. The ex-

plosion of the water heater which caused the injuries

(and which was part of the living quarters) resulted from

Movible’s failure to repair properly or to replace a

pressure relief valve of the heater after having been

warned to do so by a safety engineer.

The issue before us concerns Shell’s liability for the in-

juries and deaths by reason of its ownership of the drill-

A-90

ing platform, Louisiana Civil Code Article 2322 (1870).'

The Fifth Circuit, having determined that federal law re-

quires the plaintiffs to look to Louisiana law for redress,’

found itself unable to determine whether Shell is liable

under Civil Code Article 2322 and Louisiana

jurisprudence thereunder.

Accordingly, that court certified five questions to us

for our opinion as to state law applicable. Four questions

query as to Shell’s strict liability as owner of the drilling

platform,’ which are answered below in our discussion of

1 La.C.C. art. 2322 provides: The owner of a building is

answerable for the damage occasioned by its ruin, when this is caused

by neglect to repair it, or when it is the result of a vice in its original

construction.

The Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq.

(1953) makes Louisiana law applicable to fixed offshore platforms.

Rodrigue v. Aetna Cas. & Sur. Co., 395 U.S. 352, 89 S.Ct. 1835, 23

L.Ed.2d 360 (1969).

* These four questions are:

(1) Whether the owner of an offshore drilling platform can be

held strictly liable pursuant to Article 2322 of the Louisiana Civil

Code absent the existence of intrinsically dangerous work and ab-

sent the exercise of control of the premises — when employees of

an independent contractor hired by the owner are unjured while

on the platform by the explosion of a hot water heater located in

the living module which caused part of the platform to fall or col-

lapse, and when the employees are on the platform for the purpose

of conducting drilling operations and not for the purpose of

repairing or constructing the platform or any appurtenances or

attachments thereto.

(3) Whether injuries sustained by an employee of an indepen-

dent contractor are the result of ruin of the building within the

meaning of Article 2322 of the Louisiana Civil Code, when the fall

or collapse of the building is caused by the explosion of a hot

water heater attached to the living module of the platform.

A-91

liability and defenses under Civil Code Article 2322. In

view of the conclusions we reach below as to Shell’s

strict liability, the remaining question‘ need not be

answered by us.

I. LIABILITY UNDER CIVIL CODE

ARTICLE 2322.

Article 2322 imposes liability upon the owner of a

building to persons injured through its ruin“, whether

due to a vice in its original construction or through his

neglect to repair it.

(4) Whether a modular and movable drilling rig which is attach-

ed to an offshore drilling platform in such a manner that cutting

and burning would be required to remove it, and which is not own-

ed by the owner of the platform to which it is attached, con-

stitutes an “immovable by attachment within the meaning of

Cothern v. La Rocca, 255 La. 673, 232 So.2d 473, 477 (1970), and

as applied to Article 2322 of the Louisiana Civil Code.

(5) Whether an owner of an offshore drilling platform can be

held strictly liable pursuant to Article 2322 of the Louisiana Civil

Code for injury sustained upon the platform, even though owner-

Seer a ee

orm

The remaining question certified to us is:

2) Assuming that an owner cannot be held strictly liable to

employees of an independent contractor without the existence of

an intrinsically dangerous activity, whether drilling for oil on an

offshore drilling platform constitutes intrinsically dangerous

work’’ within the meaning of Vinton Petroleum Co. v. L. Seiss Oil

Syndicate, Inc., 19 La.App. 179, 139 So. 543 (1st Cir. 1932), and as

applied to Article 2322 of the Louisiana Civil Code.

* See also Civil Code Article 670: Every one is bound to keep his

buildings in repair, so that neither their fall, nor that of any part of

the materials composing them, may injure the neighbors or

passengers [passers-by], under the penalty of all losses and damages,

which may result from the neglect of the owner in that respect.

A-92

[1] The owner’s fault is founded upon the breach of his

obligation to maintain or repair his building so as to

avoid the creation of undue risk of injury to others. The

owner is absolved from its strict liability neither by his

ignorance of the condition of the building, nor by cir-

cumstances that the defect could not easily be detected.

He is absolved from such liability only if the thing owned

by him falls, not because of its defect, but rather because

of fault of some third person or of the person injured

thereby, or because the fault is caused by an irresistible

cause or force not usually foreseeable. Article 3556(14),

(15), (usually, an act occasioned exclusively by violence

of nature without the interference of or contribution by

any human agency).

See: Klein v. Young, 163 La. 59, 111 So. 495 (1927);

Thompson v. Commercial National Bank, 156 La. 479,

100 So. 688 (1924); Barnes v. Beirne, 38 La.Ann. 280

(1886); Camp v. Church Wardens, 7 La.Ann. 321 (1852);

Crawford v. Wheless, 265 So.2d 661 (La.App.2d Cir.,

1972); Anslem v. Travelers Insurance Company, 192

So.2d 599 (La. App. 3d Cir., 1966); Green v. Southern Fur-

niture Company, 94 So.2d 508 (La. App. Ist Cir., 1957);

Comment, 42 Tul.Law Rev. 178 (1967).

Under the terms of Article 2322, several requirements

for the imposition of liability under the article must be

met: (1) There must be a building; (2) the defendant must

be its owner; and (3) there must be a ruin caused by a

vice in construction or a neglect to repair, which occa-

sions the damage sought to be recovered.

A-93

1. Is Shell’s Platform a Building

Within the Meaning of Article 2322?

The word “building” as used in Article 2322 has

received no clear jurisprudential definition. This court

itself has never spoken directly to the question whether

an oil derrick or drilling platform constitutes a building

within the meaning of the article.

Nevertheless, some Louisiana jurisprudence indicates

that an oil derrick is a building for purposes of imposing

liability under the code article. Vinton Petroleum Co. v.

L. Seiss Oil Syndicate, 19 La.App. 179, 139 So. 543

(1932). The United States Fifth Circuit Court of Appeals

has relied on the Vinton decision, in holding that fixed

offshore drilling platforms constitute buildings for such

purposes. Mott v. Odeco, 577 F.2d 273 (1978); Moczygem-

ba v. Danos & Curole Marine Contractors, 561 F.2d 1149

(1977); McIlwain v. Placid Oil Company, 472 F.2d 248

(1973) certiorari denied, 412 U.S. 923, 93 S.Ct. 2734, 37

L.Ed.2d 150 (1973).

[2] Without making specific reference to oil derricks,

this court has made several observations as to what con-

stitutes a building under the article. An inherent require-

ment is that there be a structure of some permanence.

Mudd v. Travelers Indemnity Co., 309 So.2d 297

(La.1975). Also, the permanent structure need not be in-

tended for habitation, for it to be considered a

building. Cothern v. LaRocca, 255 La. 673, 232 So.2d

473 (1970). Additionally, we have held, for instance, that,

for purposes of delictual responsibility under Article

2322, the word “building” encompasses a wharf or

walkway over water which gave access and was attached

to a camphouse. Cristadoro u. Von Behrens Heirs, 119

La. 1025, 44 So. 852 (1907). See also Howe v. City of New

Orleans, 12 La.Ann. 481 (1857).

A-94

The wording “‘building’’ in Article 2322 is translated

from the word batiment in its corresponding article of

the French Civil Code, Article 1386. Batiment is defin-

ed in Bescherelle’s Dictionnaire National (1844) as a

generic term designating all edifices public or private,

regardless of the type material composing them, but

most particularly those which serve as habitations.’

(The writer’s translation.) Traditionally, French

jurisprudence has interpreted the word ‘batiment’’

broadly; according to an autoritive French treatise,

numerous French authors consider it to include all works

of man, synonymous with the word ‘‘construction”’ (in-

cluding structures both movable and immovable,

whether temporary or permanent).* The treatise would

more narrowly define the word, at least limiting it to im-

movables, and the tendency of modern French

jurisprudence has been so to interpret the word more

narrowly?’

Louisiana Civil Code Article 464 (1870) provides that

“buildings or other constructions, whether they have

their foundations in the soil or not, are immovable by

their nature.’’ See also Civil Code Articles 463 and 464,

as re-enacted in 1978. In the context of the Louisiana

Civil Code, a building is a type of permanent construc-

tion that would be classified as an immovable.

[3] Without further defining the limits of a building

within the meaning of Article 2322, it is sufficient for

present purposes to hold that a permanent structure,

* 2 Mazeaud & Mazeaud, Traite Theorique et Practique de la

Responsabilite Civile, Vol. 2, Section 1039, pp. 26-29 (6th ed. 1970).

For a general discussion of the meaning of the word, see Mazeaud,

id.; Comment, Article 2322 and the Liability of the Owner of an Im-

movable, 42 Tul.L.Rev. 178, especially 182-84 (1968).

A-95

such as the fixed drilling platform owned by Shell and

which has a foundation in the soil, is indeed a building

for purposes of that article, whether or not intended for

habitation.* This result is consistent with and analogous

with our earlier holdings summarized above.

The defendant further argues that federal law dictates

that we hold Shell’s drilling platform to be an island, and

therefore an extension of the soil, rather than a building.“

In support of this thesis, the defendant cites Rodrigue v.

Aetna Casualty & Surety Co., 395 U.S. 352, 89 S.Ct.

1835, 23 L.Ed.2d 360 (1969) and In Re Dearborn Marine

Service, Inc., 499 F.2d 263 (5th Cir. 1974).

We find no merit to this argument. The cited decisions

concern a choice of law question, federal maritime law

versus state law. They do not touch upon nor concern

the classification of a drilling platform as land or soil

rather than as a building.

As previously noted, the federal courts have reached,

correctly, the same conclusion as we do now, i.e., that a

drilling platform such as the present is a building within

the meaning of Article 2322: See Mott, Moczygemba,

and MclIlwain, cited above.

* It should be pointed out that, even if we were to hold that the

platform is not a building within the meaning of Article 2322, it

would not necessarily follow that the defendant is free from liability.

While Article 2322 provides a special rule of strict liability for

buildings, Article 2317 provides the general rule of strict liability for

“things.” See, Loescher u. Parr, 324 So.2d 441 (La. 1975).

According to this characterization, Shell would be the owner of

the land or soil upon which Movible affixed a building. It could

not therefore, it is argued, be subject to the liability of the owner of a

building.

10 The question addressed in the cited cases was whether fixed drill-

ing platforms located beyond the three mile limit should be

A-96

2. Is Shell the “Owner”, for Purposes of Article 2322

Liability, of the Defective Attachments to Its Drill-

ing Platform?

By contract between Shell and Movible, Movible re-

tained the ownership of its drilling rig and of its living

unit attached to Shell’s drilling platform. (Movible’s

modular living unit included the defective water heater

as a component part thereof.) Much of the argument of

both parties is addressed to this issue of ownership. Un-

questionable, as between Shell and Movible, the latter

remained the owner of its drilling rig and living unit.

The true issue, however, is whether by reason of this

contractual circumstance, Shell is relieved of its obliga-

tion as owner of the building“ (i. e., the fixed drilling

platform) for its strict liability under Article 2322 for in-

juries caused by any defect in it or its appurtenances."

[4] Preliminarily, we note that “necessary ap-

purtenances to structures and movables made im-

movable by attachment, which are defective or have

characterized as vessels, in which case the law applicable to actions

for death on the rig would be the Death on the High Seas Act, 46

U.S.C. § 761 et seq. (1920), or instead as artificial islands, in which

case the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq.

(1953), would provide the applicable law. In Rodrigue, the United

States Supreme Court interpreted the Outer Continental Shelf Lands

Act to mean that these structures were to be treated as though they

were federal enclaves in an upland state so that federal law, sup-

plemented by the state law of the adjacent state controlled in death

actions. The language of the decision clearly indicate that the court

did not contemplate characterizing the rigs (fixed structures to the

nature of artificial islands) as “land” as opposed to buildings for

purposes of either federal or state law.

n By the questions presented, we are not required to address the

issue of any concurrent liability under Articles 2315-17 or 2322 of

Movible for the defective part of Shell’s ‘‘building”’ under its control

(and — by Movible, per contractual agreement between Shell and

Movible).

A-97

fallen into ruin, also may be included within that term

‘building’ for purposes of the building-owner’s delic-

tual responsibility under Article 2322. Cothern v. LaRoc-

ca, 255 La. 673, 232 So.2d 473, 477 (1970). See also Dunn

v. Tedesco, 235 La. 679, 105 So.2d 264 (1958) (water

heater).'? Thus, the Fifth Circuit has correctly held that

the owner of a fixed drilling platform (a building) is

liable for injuries resulting from a defect in an appurte-

nant drilling rig which (as in the present case) was weld-

ed onto the building by a drilling contractor which (as

between itself and the platform owner) retained title to

this appurtenant attachment. Moczygenba v. Danos and

Curole Marine Contractors, 561 F.2d 1149 (CA 5, 1977).

In attacking the conclusion reached in the cited Moc-

zygemba decision, Shell argues that because its drilling

contractor (Movible) owned the living unit attached so as

to become part of Shell’s building (the drilling platform),

Shell cannot be held delictually responsible for defects in

the living unit, insofar as sought to be based on the

strict liability of an owner under Article 2322 for defects

in its buildings or appurtenant or component parts

thereof.

In our view, this argument overlooks the basis for the

delictual obligation of the owner of a building for

damages caused by defects in its structure or ap-

purtenances:

1 Other Louisiana cases which have held the owner of a building

liable under this appurtenance doctrine” include, for instance,

Adamson v. Westinghouse Electric Corp. 236 So.2d 556

(La.App.1970) (elevator), Fontenot v. Sarver, 183 So.2d 75 (La.App.

(1966) window fan), and Murphy v. Fidelity and Casualty Co., 165

So.2d 497 (La.App.2d Cir. 1964) (electrical wiring).

A-98

“The obligation of every property owner to answer for

damages for a failure to keep his property in such condi-

tion of repair that it will not be dangerous to other per-

sons is imposed by law, by Articles 670, 2315, 2322 of

the Civil Code. Klein v. Young, 163 La. 59, 69, 111 So.

495 (1927). In Klein, this court held that, although the

owner of the premises could by contract allow another

person to use the property for any particular purpose

and could thus regulate the rights as between owner and

contractual occupant, the owner could not by such con-

tract evade his obligation imposed by law to repair harm

to others resulting from defects in his premises.

151 The decisions previously cited have imposed Arti-

cle 2322 liability upon the owner

This text is long and has been trimmed here. Open the source document for the complete record.