Roosevelt Thurmond v. Delta Well Surveyors, Gulf Oil Corp. v. Delta Well Surveyors and P & S Well Service, Inc.
Docket: 86-3853
Court: Court of Appeals for the Fifth Circuit; February 4, 1988; Federal Appellate Court
The case involves a dispute over whether a contract for wireline services in navigable waters falls under maritime law or state law, which impacts the enforceability of an indemnity provision. The primary obligation of the contract, according to the defendants/appellants (Delta Well Surveyors and P. S Well Services), is non-maritime since it focuses on wireline services, while the plaintiff/appellee (Gulf Oil Corp.) argues that it is maritime due to the necessity of providing a barge and crew equipped for these services.
The court found that the district court incorrectly ruled the contract as maritime. It concluded that although the contract had some incidental maritime obligations, its essence was non-maritime, stemming from P. S's obligation to perform wireline services. Consequently, the indemnity provision's enforceability is governed by state law, specifically the Louisiana Oilfield Indemnity Act (LOIA).
The facts reveal that on February 1, 1981, P. S entered into a "blanket contract" with Gulf Oil to provide wireline services for offshore wells in Louisiana. This contract included an indemnity clause for potential legal issues arising from the relationship. The services were to be carried out from the Barge KATHY, which was equipped for wireline operations and operated by a crew that included Roosevelt Thurmond. An incident occurred on March 8, 1983, when Thurmond was injured while performing a task related to the wireline services on a well in Gulf Oil's Northwest Bay field.
Thurmond initiated a personal injury lawsuit against Gulf Oil, which in turn filed for indemnity against Thurmond's employer, P. S and Delta, leading to the consolidation of both cases. Delta and P. S sought summary judgment, claiming Gulf Oil's indemnity request was barred by the Louisiana Oilfield Indemnity Act (LOIA). The district court initially granted this motion but later vacated the judgment, determining that the LOIA was not applicable due to the maritime nature of the parties' agreement. Subsequently, the court granted Gulf Oil's motion for summary judgment, affirming its right to indemnity under the blanket contract as a matter of law.
The discussion references Benedict on Admiralty, which defines maritime contracts broadly, emphasizing their connection to maritime activities and navigable waters. P. S and Delta contended that a wireline service contract did not qualify as a maritime contract since it primarily pertained to oil production rather than traditional maritime activities. In contrast, Gulf Oil argued that the contract was maritime due to the necessity of using a vessel for offshore wireline services.
The excerpt highlights the evolution of maritime law concerning offshore oil production, noting a precedent in Theriot v. Bay Drilling Corp. that recognized offshore drilling contracts as maritime commerce. Gulf Oil maintained that the wireline service contract included maritime obligations, despite P. S and Delta's assertion that congressional actions, such as the Outer Continental Shelf Lands Act, imposed limitations on maritime law's applicability to oil production contracts. They referenced Laredo Offshore Constructors, Inc. v. Hunt Oil Co., which affirmed that not all obligations in mixed contracts automatically fall under admiralty law. This principle of severability between maritime and nonmaritime obligations is recognized beyond the context of the Lands Act.
The key issue is whether the contract for wireline services contains maritime and nonmaritime obligations and whether the dispute stems from a nonmaritime obligation governed by state law. The principal obligation of the contract involves wireline services, which are classified as nonmaritime as they do not pertain to vessel operation and are specific to the oil and gas industry, performed on land-based and offshore wells. Maritime law is ill-suited to address oil production issues, while state law is appropriate for such matters.
Roosevelt Thurmond's lawsuit for injuries sustained while performing wireline services is central, as Gulf Oil seeks indemnity for its liability to him. At the time of his injury, Thurmond was engaged in nonmaritime activities, specifically standing on a fixed platform and opening a well valve, rather than performing maritime duties related to the navigation or operation of the Barge KATHY.
The court distinguishes this case from Theriot v. Bay Drilling Corp., where the contract involved drilling and explicitly addressed the use of a vessel. In contrast, the wireline service contract between P.S. and Gulf Oil did not mention a ship, making the barge's use incidental. The district court incorrectly inferred that the necessity of a barge for offshore wireline services implied a maritime contract, citing Lefler v. Atlantic Richfield Co. Inc. as support. However, Lefler involved a contract that evolved to include maritime obligations, unlike this case, where the cause of action arises solely from a nonmaritime obligation. Thus, Lefler is not applicable here.
The court determined that the wireline services involved in the contract action do not engage maritime law, paralleling its previous decision in Sohyde Drilling, Marine v. Coastal State Gas Prod. In that case, Louisiana law was applied to a property damage claim stemming from an offshore well blowout on a drilling barge in Louisiana waters. The court concluded that the workover operations lacked a significant maritime character, as the parties did not possess unique maritime roles, the barge was not conducting maritime activities during the incident, and the equipment involved did not exhibit maritime characteristics. Consequently, the court ruled that traditional admiralty principles did not necessitate the application of maritime law.
The conclusion of the current case is that the contract included both maritime and nonmaritime obligations, with the primary obligation being nonmaritime. Therefore, the enforceability of the indemnity provision falls under state law. The court reversed the district court's prior order that vacated a summary judgment favoring the defendants and remanded the case with instructions to grant summary judgment in their favor.
Circuit Judge Garwood expressed agreement with the main opinion but noted concerns regarding inconsistencies among various related rulings, particularly highlighting the lack of citation between the cases like Sohyde, Transcontinental Gas Pipeline, Corbitt, and Theriot. He pointed out that while Sohyde was followed as precedent, it was questioned in subsequent cases without cross-referencing. The tension among these cases was acknowledged, particularly in Laredo Offshore Constructors, Inc. v. Hunt Oil Co., where the Outer Continental Shelf Lands Act (OCSLA) influenced the application of maritime law. However, the current events occurred in state territorial waters, similar to prior cases like Transcontinental Gas Pipeline and Sohyde.
The ruling is consistent with the rationale established in Sohyde, suggesting that the construction and maintenance of pipes and platforms do not inherently possess a maritime nature in relation to mineral exploration on the outer continental shelf (OCS). The opinion expresses a preference for Sohyde over later cases like Corbitt and Theriot, advocating for an en banc review to clarify when mineral development activities in state territorial waters should be classified as maritime. The applicability of state law in these cases, particularly under the Louisiana Oil Field Indemnity Act, is questioned, emphasizing that both state and admiralty law could validly apply to indemnity agreements, maintaining consistency with OCSLA's directives.
The indemnity agreement between P.S. (the contractor) and Gulf Oil is highlighted, detailing the contractor's obligation to protect Gulf against claims related to personal injuries, property damage, or other litigation arising from the contractor's work, regardless of negligence. The agreement allows either party to terminate it with ten days' notice. The excerpt also notes that oil field workers can qualify as seamen, referencing legislative efforts aimed at balancing bargaining power in the oil industry to enhance safety, underscoring the economic and moral justifications behind such regulatory measures.
The Louisiana Offshore Industries Act (LOIA) is not determinative but aligns with Louisiana's policy to enhance oilfield safety, as illustrated in Matte v. Zapata Offshore Co., where a contractual choice of law provision was invalidated for circumventing safety legislation. The current case may be distinguished from Sohyde by focusing on the specific work order for the Barge KATHY rather than a general contract. This work order required the barge to serve as an operational base for crew activities, utilizing its onboard equipment, unlike the submersible drilling barge in Sohyde, which was stationary. The scenario suggests that after completing the task, the crew might indeed signal to "weigh anchor." However, the court has not previously clarified this distinction, and its validity should be evaluated by the en banc court alongside the Sohyde and Corbitt, Theriot case lines. Caution has been advised against broadly interpreting the Outer Continental Shelf Lands Act (OCSLA) beyond its intended scope, and it has been acknowledged that admiralty law supersedes state wrongful death statutes in territorial waters.
