Court: Louisiana Court of Appeal; March 28, 1995; Louisiana; State Appellate Court
Helmer Directional Drilling, Inc. (Helmer) filed a lawsuit against Dexco, Inc. (Dexco) for non-payment of services related to drilling Dexco's Vaccaro Well in Plaquemines Parish, Louisiana, and sought recognition of a privilege under the Oil Well Lien Act. Fidelity and Deposit Company of Maryland was added as a defendant. Dexco responded by denying the allegations and counterclaimed, asserting that Helmer's negligent drilling led to the well being drilled incorrectly, necessitating the drilling of a new well. Helmer argued that Dexco's counterclaim was barred by the one-year prescription period for torts. The trial court rejected Helmer’s prescription exception, classifying the case as one of contractual breach with a ten-year prescriptive period, and ruled in favor of Dexco, dismissing Helmer's claims and awarding Dexco $241,439 for damages incurred due to Helmer's improper performance, which included costs for drilling in the wrong direction and for drilling a new well to reach the intended geological targets. Helmer is appealing this judgment, maintaining its prescription exception and challenging the dismissal of its non-payment suit and the damages awarded to Dexco. The contract stipulated that Helmer was to perform drilling to the best of its skill and ability, while Helmer contends that its invoices limit liability for results and that the customer bears full responsibility for any losses.
Helmer argues that certain contractual language absolves it from liability to Dexco, even if it mishandled the drilling. Conversely, Dexco contends that this language only limits Helmer's liability regarding specific tools, as Helmer did not manufacture them. Dexco claims Helmer was obligated to perform its directional drilling services diligently and skillfully, which it alleges Helmer failed to do. Dexco accuses the onsite directional driller, Mike Kelsey, of negligence and incompetence, stating he was frequently absent and took directional surveys less often than required—every 60 feet instead of the agreed 30 feet. This error caused the drilled hole to deviate for three days, missing the first objective target significantly.
When Gaspard from Helmer temporarily replaced Kelsey, he corrected the hole's direction, but once Kelsey returned, the issue recurred. Helmer denies Kelsey’s culpability and claims the hole's direction had been corrected before Gaspard arrived. The trial court viewed Kelsey’s termination from Helmer as indicative of dissatisfaction with his performance, while Helmer attributed his layoff to the oil industry's downturn in 1984. Helmer also claims it completed its contractual obligations and seeks payment of $26,728.35, arguing that modifications to the targets were made with Dexco's consent. Helmer maintains that Dexco's refusal to authorize additional drilling efforts modified their agreement regarding the first target. In contrast, Dexco asserts that by the time Helmer suggested further drilling, the hole had already reached a point where it could not be redirected to the first target, an assertion supported by Kelsey’s admission that the loss of direction before the arrival of Dexco’s President was critical.
Dexco asserts that the agreement with Helmer was not modified, citing Kelsey’s prior inadequate performance as the reason for Severson's lack of confidence in Kelsey’s ability to reach the first target with any additional directional tool. Dexco argues it had surpassed its budgetary limits and could not authorize an additional $20,000 for another mud motor run. Consequently, Dexco felt compelled to follow Kelsey’s recommendation for a method projected to effectively penetrate the second objective zone, close to the planned bottom hole location.
Helmer argues that the obligation to hit the first target was modified with Dexco's knowledge and consent on June 20, when Dexco declined to approve an additional mud motor run. Helmer contends that after rejecting a further directional run, Dexco effectively modified the proposal, relieving Helmer of accountability for not hitting the target. However, the court found no manifest error in the trial court's determination that no modification occurred.
On June 21, Severson observed significant directional loss and learned that Kelsey’s actions led to a 10-degree directional loss due to hole washing and reaming. Kelsey failed to use a hole opener beforehand, which contributed to the issues. Recognizing that Helmer would not reach the first target, and having exceeded spending authority, Dexco opted for a packed hole assembly to stabilize the direction rather than risk another unsuccessful attempt.
Helmer also challenges the trial court's findings that Kelsey negligently drilled the well, arguing that the conclusions were based on manifest error. Helmer claims the trial court misjudged the impact of Kelsey’s actions on the well's directional integrity.
Helmer claims that the trial court made several manifest errors regarding the drilling operations and subsequent findings. Firstly, Helmer contends the court incorrectly stated that Gaspard corrected the error in the hole's direction while he was present. Secondly, Helmer argues it was erroneous for the court to find that Gaspard's work was negated upon his departure, leading to Kelsey’s negligent drilling. Additionally, Helmer disputes the court's assertion that Kelsey spent a significant amount of time off the rig floor instead of working on the drilling.
In terms of damages, Helmer challenges the trial court's award of $20,936 to Dexco for drilling costs incurred from drilling in the wrong direction for two days, arguing that the actual time was only 14 hours. Helmer suggests that this amount should be reduced to $4,885.02. However, after reviewing the evidence, the court upheld the initial damage award, stating that Kelsey’s failure to correct the drilling direction resulted in 62 hours of lost rig time and expenses.
Helmer also contests the $220,503 awarded to Dexco for drilling a new well, arguing that the second target was hit and that hitting the first target was not essential. Dexco’s witnesses confirmed hitting the second target, and the trial court ultimately decided that Dexco was entitled to the full cost of drilling a new well. However, the court found this amount excessive and awarded Dexco only 50 percent of that cost, totaling $110,251.50.
Lastly, Helmer asserts it should be compensated $26,728.35 for its services and tools provided to Dexco, claiming no breach of duty occurred.
The directional well bore successfully reached the second target. The trial court's dismissal of Helmer’s principal demand was justified due to significant damage suffered by Dexco from Helmer's inadequate performance. Helmer argued that the trial court incorrectly applied a ten-year prescriptive period for breach of contract claims to claims of negligent performance by employee Kelsey, asserting that a one-year period for delictual actions should apply since Dexco's Reconventional Demand included both breach of contract and negligence allegations. Dexco claimed that Helmer had orally contracted to hit three specific subsurface targets and alleged that Helmer failed to do so. While some allegations related to Kelsey's negligence and fraudulent misrepresentation were framed in tort terms, the trial court determined that the essence of the claim was a breach of contract, thus affirming the ten-year prescriptive period. The court found no error in this ruling and concluded that Dexco was improperly awarded $220,503 for drilling a new well, reducing the damages to $110,251.50. Helmer sought $26,728.35 for services rendered from June 14 to June 25, 1983, while Dexco's reconventional demand aimed for $500,000 in damages due to alleged negligence, fraud, and breach of contract. The drilling objectives included specific depth, displacement, and directional targets, with Helmer’s proposal detailing these objectives and expenditures exceeding their authority for expenditure. Michael Norton, a consultant from World Wide Drilling, facilitated the drilling coordinates for Helmer.
