Cole v. Chevron Chemical Company-Oronite Division, 72-1025.

Citation477 F.2d 361
Decision Date19 June 1973
Docket NumberNo. 72-1025.,72-1025.
PartiesWilliam F. COLE, Plaintiff-Appellant, v. CHEVRON CHEMICAL COMPANY-ORONITE DIVISION, Defendant-Appellee, MECHANICAL CONTRACTING ENGINEERS, INC., and Liberty Mutual Insurance Company, Third Party Defendants-Appellees-Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

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George J. Kambur, Clark A. Richard, New Orleans, La., for plaintiff-appellant.

Lloyd C. Melancon, New Orleans, La., for Chevron Chemical Co.

John V. Baus, New Orleans, La., for Mechanical Contracting Engineers, Inc., and Liberty Mutual Ins. Co.

Before GEWIN, GOLDBERG and DYER, Circuit Judges.

Rehearing and Rehearing En Banc Denied June 19, 1973.

DYER, Circuit Judge:

Two questions are presented on appeal in this Louisiana-based diversity case: (1) whether the work that Mechanical Contracting Engineers, Inc., performed for Chevron at its plant in Belle Chase, Louisiana, was, as a matter of law, part of Chevron's "trade, business, or occupation" for the purposes of establishing coverage under § 6 of the Louisiana Workmen's Compensation Statute, La. Rev.Stat.Ann. § 23:1061;1 and (2) whether in Louisiana, an indemnity agreement that does not expressly specify the indemnitor's intent to indemnify for the indemnitee's own negligence is enforceable where the damage is caused by the concurrent negligence of the indemnitee and indemnitor, rather than by the sole negligence of the indemnitee. We affirm in part and reverse in part.

Mechanical was hired by Chevron to do general welding and pipe fitting work at its Belle Chase plant. The job primarily consisted of cutting and removing old pipes, valves, gratings, and other refinery paraphernalia to make way for construction of additional facilities and installation of new equipment. In February 1968 Cole, a welder employed by Mechanical for the Chevron job, was injured during the course of his employment at the Belle Chase plant. He sued Chevron under the general negligence law of Louisiana for damages he sustained as a result of his slipping and falling in a puddle of oil while he was helping a fellow employee carry a heavy piece of steel grating. The puddle was comprised of both "old" and "new" oil; the new oil was spilled when Mechanical's welders cut pipes containing the oil, but the old oil had been left from Chevron's earlier operations.

Cole contended that Chevron was negligent in that it breached the duty it owed him as a Mechanical employee to remove old oil from the floor before Mechanical began working in the area and that Chevron's firewatcher breached his duty to clean up the spilled new oil. Chevron countered that it was Cole's "statutory employer" within the meaning of La.Rev.Stat.Ann. § 23:1061 and that therefore Cole's exclusive remedy for his injury was workmen's compensation since under Louisiana law a workman cannot maintain a tort action against his statutory employer. La. Rev.Stat.Ann. § 23:1032. In response to Cole's claim, Chevron also asserted a third-party complaint against Mechanical and its insurer, Liberty Mutual Insurance Company, on the basis of a written indemnity agreement between Chevron and Mechanical for the work being performed by Mechanical when Cole was injured.

Prior to trial Chevron filed a motion for summary judgment supported by affidavits; the motion was granted and the suit dismissed. On appeal, this Court reversed that judgment and remanded the cause for trial on the merits because material factual issues remained to be tried. Cole v. Chevron Chemical Co., 5 Cir. 1970, 427 F.2d 390. In so holding the Court pointed out that:

In cases such as Arnold v. Shell Oil Company, 5 Cir., 1969, 419 F.2d 43, and Allen v. United States Fire Insurance Company, 222 So.2d 887 (La.Ct. App.1969), the factual picture of the principal employer\'s business operations, and of the part the activity in issue played in those operations, was well defined. Here, on the other hand, the picture of Chevchem\'s operations at its Oronite Division Plant is not clear. That Chevchem is engaged in the production of petro-chemicals derived from hydrocarbons is not conclusive of the issue whether all types of welding work performed at its Oronite Division Plant—demolition and construction work, as well as "repair" and "maintenance" work—are part of the "regular operations" at the Plant. Further factual development is necessary. . . .

427 F.2d at 394.

On remand, Cole's suit against Chevron was tried in two parts. The first day of testimony related only to the issue of whether Chevron was the statutory employer of Cole. This issue was submitted to the jury; it determined that the work for which Chevron contracted with Mechanical was not part of Chevron's "trade, business, or occupation." After the second phase of the trial was completed on the following day, a special verdict was rendered. The jury found that Cole was injured, that his injury was caused by the negligence of Chevron, that Cole was not contributorily negligent, and that he was entitled to damages of $67,500.

Subsequently, Chevron filed a motion for a judgment notwithstanding the verdict and alternatively for a new trial. The district court granted the motion for a judgment N.O.V. and conditionally granted a new trial, contingent on the judgment N.O.V. not being affirmed on appeal. In the meantime, Chevron's indemnity action against Mechanical was tried without a jury, and the district court, 334 F.Supp. 263, held that Chevron was entitled to indemnification because Mechanical had been concurrently negligent in that it had a contractual obligation to keep "a competent man in the immediate vicinity . . . to supervise the work" and its personnel failed to call the spillage of new oil to the attention of Chevron's firewatcher. Reasoning that Cole's injuries were therefore caused "directly or indirectly" (the words of the indemnity agreement) by Mechanical, the court concluded that Mechanical was bound to indemnify Chevron for any damages that it might owe Cole as well as for its costs of defense, which were stipulated to be $6,915. This appeal by Cole on the statutory employer question and by Mechanical on the indemnity issue ensued.

Was the Work Performed by Mechanical and Cole Part of Chevron's "Trade, Business, or Occupation"?

Section 6 of the Louisiana Workmen's Compensation Statute, La. Rev.Stat.Ann. § 23:1061, provides that any person (referred to as a principal) who contracts out work which is a part of his "trade, business, or occupation" is liable for workmen's compensation to any of the contractor's employees who are injured while engaged in such work to the same extent as if the contractor's injured employee were one of the principal's own employees. In other words, under certain circumstances, the principal is considered to be the statutory employer of the independent contractor's employees for the purpose of establishing coverage under the Workmen's Compensation Statute. The purpose of this provision is to prevent the principal from evading his workmen's compensation responsibility by interposing an independent contractor between himself and employees who are actually utilized in performing a part of the principal's "trade, business, or occupation." Cole v. Chevron Chemical Co., 5 Cir. 1970, 427 F.2d 390, 392; Arnold v. Shell Oil Co., 5 Cir. 1969, 419 F.2d 43, 46. Section 23:1061 benefits the employees of the contractor when the contractor is financially impoverished, because the principal may be held liable for their workmen's compensation. "On the other hand, when the contractor is able to fulfill his compensation responsibilities, the provision operates to limit his employees to the maximum benefits payable under the Workmen's Compensation Statute, since the principal, as their `statutory employer,' is, like the contractor, immunized from tort liability to the employees by the exclusive-remedy provision of that act. La.Rev.Stat.Ann. § 23:1032." Cole v. Chevron Chemical Co., supra at 392-393.

The standard for determining whether a given activity performed by an independent contractor is part of a principal's "trade, business, or occupation" is, to a degree, dependent upon the factual context of the case. The Louisiana courts in the early cases of Seabury v. Arkansas Natural Gas Corp., 1930, 14 La.App. 153, 127 So. 25, and Dandridge v. Fidelity & Casualty Co., La.App.1939, 192 So. 887, applied a two-pronged test based on business necessity and employment of similar workers. However, keeping in mind the policy that workmen's compensation law should be liberally construed regardless of whether the employer or employee is the party asserting coverage, the Louisiana courts in Turner v. Oliphant Oil Corp., La.App. 1940, 200 So. 513; Thibodaux v. Sun Oil Co., La.App.1949, 40 So.2d 761; Doucet v. W.H.C., Inc., La.App.1968, 212 So.2d 267; and Allan v. United States Fire Insurance Co., La.App.1969, 222 So.2d 887, retreated somewhat from this twopronged test. In these cases, the courts held that the fact that the principal did not have any employees engaged in a similar activity was not controlling where the work contracted out was so necessary to the principal's operations that, if it were not performed by the independent contractor, the principal would have to hire workers of its own to perform the task.

In Arnold v. Shell Oil Co., supra, the Fifth Circuit was confronted by an analogous factual situation. An employee of an independent contractor was injured while repairing a Shell heater-treater, which is a device used to separate sand and salt water from freshly mined oil. Shell had no workers employed on this job and, in fact, had always contracted out its heater-treater maintenance work. It was undisputed, however, that the proper functioning of the heater-treater is necessary to the efficient operation of an integrated oil company, because the salt water and sand would corrode the...

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