Court: Court of Appeals for the Fifth Circuit; September 22, 2008; Federal Appellate Court
Seacor Marine, LLC appeals the district court's summary judgment favoring Grand Isle Shipyard and Gray Insurance Company in a declaratory judgment action concerning an indemnity dispute. The district court incorrectly applied the Outer Continental Shelf Lands Act (OCSLA) to an incident involving an offshore worker, determining that the Louisiana Oilfield Indemnity Act (LOIA) served as surrogate federal law under OCSLA, which invalidated the indemnity agreement. The appellate court finds that general maritime law governs the situation, not OCSLA, and vacates the district court's order regarding the indemnity agreement, remanding the case for further proceedings.
The case arises from an April 2005 incident where Denny Neil, an employee of Grand Isle, was injured while being transported by Seacor’s vessel, the M/V SEA HORSE IV. Neil, who was traveling from his work platform to his living quarters, filed suit against Seacor for vessel negligence under the Longshore and Harbor Workers’ Compensation Act (LHWCA). Seacor sought indemnity from Grand Isle and its insurer, Gray, leading to a declaratory judgment action initiated by Grand Isle and Gray in the U.S. District Court for the Eastern District of Louisiana. They contended that LOIA applied and barred Seacor's claims, while Seacor argued for the applicability of general maritime law, which does not invalidate the indemnity agreement.
In a summary judgment issued on September 26, 2007, the district court ruled in favor of Grand Isle and Gray, asserting that Louisiana law and LOIA prevented Seacor from asserting its indemnity and insurance claims. Seacor subsequently appealed, and the appellate court identified the primary legal issue as whether Louisiana state law, specifically LOIA, could void the indemnity obligations in the contracts between BP and its contractors.
The case addresses whether BP's indemnity provision is invalidated by the Louisiana Oilfield Indemnity Act (LOIA), which nullifies any agreement requiring defense or indemnification for death or bodily injury when negligence or fault lies with the indemnitee or their agents. The LOIA was enacted to protect contractors from imbalanced bargaining power with oil companies, preventing them from being forced into unfavorable indemnity agreements. It is agreed that if the LOIA applies, it would void BP's indemnity provision.
For Louisiana law to be applicable under the Outer Continental Shelf Lands Act (OCSLA) as surrogate federal law, three conditions must be satisfied: (1) the dispute must arise on a situs covered by OCSLA; (2) federal maritime law must not apply; and (3) state law must not conflict with federal law. The court concludes that the OCSLA situs requirement is not met in this case, making it unnecessary to evaluate the other two conditions.
OCSLA defines the situs as extending the jurisdiction of U.S. law to the subsoil and seabed of the Outer Continental Shelf (OCS) and to artificial structures attached to it for resource exploration or transportation. The 2002 case Demette v. Falcon Drilling Co. clarified distinctions within OCSLA regarding artificial islands and installations, establishing that OCSLA applies to structures attached to the seabed for resource extraction or transportation, but these must meet specific criteria to qualify under the statutory situs requirement.
The SEA HORSE IV does not qualify as an OCSLA situs under § 1333(a)(1), as it is not considered 'the subsoil and seabed of the [OCS],' an 'artificial island,' or an 'installation' permanently or temporarily attached to the seabed. Specifically, § 1333(a)(1) excludes 'a ship or vessel' used for transporting resources from the OCS from being a potential situs. The district court's determination that the situs requirement was met is flawed as it did not apply the precedent set in Demette and instead relied on older, distinguishable authority. Additionally, the district court failed to consider the Supreme Court's ruling in Offshore Logistics, Inc. v. Tallentire, which is relevant to the case. In Tallentire, the Supreme Court found that OCSLA did not apply to an accident involving helicopter transport from an offshore platform to shore, emphasizing that admiralty jurisdiction was appropriate due to the incident's maritime nature. The Court ruled that the decedents' status as platform workers did not affect the applicability of OCSLA, asserting that coverage under the statute should be determined by locale, not by the individual's status. The district court's reliance on PLT Engineering is also misapplied; while that case affirmed OCSLA's applicability in a breach of contract context involving undersea work, it does not support the district court's conclusions in the current case.
OCSLA applies as the gathering line meets the statutory definition of an "other device" attached to the seabed for resource development. It was buried under the ocean floor and connected to both a platform and a transmission line, fulfilling the first condition of OCSLA. The substantial work locations included covered situses such as the subsoil, an artificial island, and a resource production installation. The analysis draws from PLT Engineering, which involved a contract dispute, highlighting that its findings may not directly apply to tort actions involving vessels on the high seas.
The case is distinguished from Tallentire, which dealt with an accident during passenger ferrying related to maritime activity. Here, the vessel was engaged in similar ferrying between two "islands," aligning it with Tallentire’s scope. Although the accident occurred closer to the offshore platform than in Tallentire, there was no evidence that the injured party, Neil, was in physical contact with the platform at the time of the accident. This absence of contact is critical, as precedent indicates that injuries involving individuals in contact with a platform satisfy OCSLA’s situs requirement, as seen in cases like Hollier and Hodgen. Consequently, Neil's lack of contact with the platform renders proximity irrelevant to the application of OCSLA in this instance.
The SEA HORSE IV does not qualify as 'the subsoil and seabed of the OCS,' an 'artificial island,' or 'an installation permanently or temporarily attached to the seabed' under § 1333(a)(1). The district court acknowledged the case of Hodgen, where Seacor argued that whether the vessel was in physical contact with the platform or seabed at the time of the accident was crucial. Seacor's argument proposed a strict rule that state law would not apply without physical connection to an OCSLA situs. However, the Fifth Circuit does not endorse such a rigid physical contact requirement. In Hodgen, the court noted that physical contact was not necessary for OCSLA situs to be established, as exemplified by the Hollier case, where the injured worker's drowning did not occur while in contact with an OCSLA situs. In this case, it was clear that the injured party, Neil, was not in contact with the platform at the time of injury, distinguishing it from Hodgen and Hollier. The district court misinterpreted these prior cases in asserting OCSLA applicability. Furthermore, a September 2007 ruling by Judge Jay C. Zainey in Fuselier v. Sea Boat Rentals, Inc. reiterated that the OCSLA only applies if the controversy arises on an OCSLA situs. In Fuselier, the plaintiff was injured while traveling to an OCSLA situs but not on one, leading to the conclusion that the OCSLA situs requirement was unmet and thus state law governed. Judge Zainey's decision emphasized that the OCSLA does not extend to controversies not arising on an OCSLA situs, reinforcing the necessity of this situs determination.
The SEA HORSE IV does not qualify as an OCSLA situs under § 1333(a)(1), as interpreted by Demette, leading to the conclusion that the district court erred in applying OCSLA and, by extension, the LOIA to bar Seacor’s indemnity claims against Grand Isle. Consequently, the order invalidating the indemnity agreement and granting summary judgment for Grand Isle and Gray is VACATED. The district court did not address an additional argument regarding the applicability of Section 905(b) of the LHWCA, which prohibits enforcement of the indemnity provision, and this issue remains unresolved. The case is REMANDED for the district court to consider this and any other outstanding matters. Seacor's indemnity claim is based on paragraph 14.07 of its contract with BP, which requires the contractor to indemnify other contractors against various claims, irrespective of negligence. The opinion acknowledges critiques of Demette's broad interpretation of § 1333(a)(1) but affirms its authority in the circuit. The court notes the complexity of distinguishing between the analyses of PLT Engineering and Tallentire and emphasizes that unresolved issues remain, including the scope of insurance coverage provided by Gray’s policies to Grand Isle concerning Seacor’s claims.
