Phillips Petroleum Co. v. Best Oilfield Services, Inc.

• Decision Date: 04 April 1995
• Docket Number: No. 94-30250,94-30250
• Citation: 48 F.3d 913
• Parties: PHILLIPS PETROLEUM COMPANY, Plaintiff-Appellee, v. BEST OILFIELD SERVICES, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 913

48 F.3d 913

PHILLIPS PETROLEUM COMPANY, Plaintiff-Appellee, v. BEST OILFIELD SERVICES, INC., Defendant-Appellant.

No. 94-30250.

United States Court of Appeals,

Fifth Circuit.

April 4, 1995.

Albert J. Derbes, III, Albert J. Derbes, IV, Jon A. Majewski, Metairie, LA, for appellant.

David M. Culpepper, Omar F. Kuebel, III, Draper & Culpepper, New Orleans, for appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before REAVLEY, DUHE and PARKER, Circuit Judges.

DUHE, Circuit Judge:

Best Oilfield Services, Inc. (Best) appeals the district court's judgment in favor of Phillips Petroleum Company (Phillips). Phillips asserted three liens against Best's workover rig and sought to recover damages for breach of contract and indemnity. The district court held all three liens valid against Best's rig. On appeal, Best maintains that the liens are invalid because of prescription, inadequate description of the leased premises and wells, and confusion. We affirm in part and reverse in part and remand.

BACKGROUND

Best contracted with Phillips to perform workover services on certain oil wells located on property Phillips leases in the Bastian Bay Field, Plaquemines Parish, Louisiana. The contract contained an indemnity provision which required Best to pay all suppliers' claims, allow no lien to be placed on the wells, and hold Phillips harmless against any claims or liens. Pursuant to a letter agreement dated October 4, 1991 that extended the contract, Best's rig performed workover services on the Fasterling B No. 1 and Fasterling No. 3 wells and converted the LL & E Fee 9 No. 10 well into a saltwater disposal well. Best's rig left the Field before December 6, 1991. Phillips then paid Best in full.

Best, however, did not pay three of its suppliers. Best owed $32,830 to Diamond "B" Marine Services, Inc. (Diamond), which supplied crew boats to Best. It owed $63,251.12 to T.L.C. Marine Services, Inc. (TLC), which provided towing and barging services to Best. Lastly, it owed $21,239.59 to Gulf Seafood Company of Empire, Inc. (Gulf), which furnished fuel to Best. On April 9, 1992, Phillips was notified that Diamond had recorded a lien in Plaquemines Parish under the Louisiana Oil, Gas, and Water Wells Lien Act, La.Rev.Stat.Ann. Secs. 9:4861-:4867 (the At trial, Best did not contest liability on the debts. Rather, it asserted three defenses to the applicability of the liens to its rig. First, Best contended that the TLC and Gulf liens were not recorded within the required 180 days and thus were prescribed under La.Rev.Stat.Ann. Sec. 9:4862.A. ² Second, Best contended that the descriptions in the lien affidavits filed in the parish records were inaccurate and legally inadequate under id. Sec. 9:4862.C. Third, it contended that the liens were extinguished by confusion because Phillips asserted privileges against property that it leases.

"Act"). ¹ Phillips paid the suppliers in full in exchange for an assignment of their rights against Best. On June 8, 1992, Phillips recorded the TLC and Gulf liens in Plaquemines Parish. On July 9, 1992, Phillips commenced this action against Best seeking $117,320.71 plus costs and ten percent attorney's fees.

After a bench trial on briefs and stipulated facts, the district court granted judgment for Phillips. The court rejected each of Best's defenses. On prescription, the court found that TLC last provided services to Best on January 8, 1992, and that Gulf had last provided fuel to Best on January 3, 1992. Consequently, the court held that Phillips had recorded the liens before the 180 day periods had run. On description, the court held that the descriptions on file were sufficient to put third parties on notice as to the property affected by the liens. Finally, on confusion, the court held that confusion was inapplicable because Phillips did not acquire full ownership of both sides of the lien obligations. Best raises these same three arguments on appeal.

DISCUSSION

We review a district court's findings of fact from a bench trial for clear error. Fed.R.Civ.P. 52(a); Verrett v. McDonough Marine Serv., 705 F.2d 1437, 1441 (5th Cir.1983). We review the court's legal conclusions de novo. ³

I. Prescription

Best contends that the district court's findings are clearly erroneous because TLC and Gulf provided no services or fuel to Best within the confines of the Bastian Bay Field after December 7, 1991. Best contends that the next day should count as the first day of the 180 day periods. Starting on December 8, 1991, the last day to record would have At oral argument, Phillips conceded that the district court erred in finding that the last day of services occurred in January 1992. As an alternative argument, Phillips seeks to construe the "in connection with" language in Sec. 9:4861.B to include services up through December 10, 1991. If the first day to count is December 11, 1991, then Phillips's recordation is timely. ⁵

been June 4, 1992, making Phillips's recordation on June 8 too late. ⁴

A. The TLC Lien

TLC provided towing and barging services to Best. TLC towed Best's rig from the Field to Empire, Louisiana, where it arrived before December 1991. TLC towed a barge, the SUARD VIII, was towed back to Lockport, Louisiana, where it arrived on December 7, 1991. When it arrived in Lockport, however, the barge was still loaded with Best's equipment. The equipment had to be unloaded and the barge cleaned. The cleanup operation concluded on December 10, 1991, when Best redelivered the SUARD VIII to TLC. The question is whether the unloading and cleanup of the barge delays the start of the 180 day period until December 11.

Because TLC provided towing and barging services, we look to Sec. 9:4862.A(1)(b). The statute describes the last day before the 180 day period begins as the last day such services were performed. The word "such" refers to Sec. 9:4861.B, which describes services rendered "in connection with" the drilling or operation of any oil well. Best would have us limit "in connection with" to services rendered in the Bastian Bay Field. Phillips promotes a broader construction that would cover services between the Field and Best's base in Lockport where it redelivered the barge.

Best asks us to construe the statute stricti juris. When in doubt, Louisiana courts construe privileges strictly. Amoco Prod. Co. v. Horwell Energy, 969 F.2d 146, 148 (5th Cir.1992). The reason for strict construction is that privileges often derogate the rights of innocent parties. Id. Nevertheless, courts have construed Sec. 9:4861.B in a liberal and nontechnical way because they consider its "in connection with" language to be "broad" and "all encompassing." See Ogden Oil Co. v. Servco, 611 F.Supp. 572, 576 (M.D.La.1985); Ogden Oil Co. v. Venture Oil Corp., 490 So.2d 725, 730 (La.Ct.App. 3d Cir.), writ denied, 494 So.2d 328 (La.1986). Consequently, we apply a reasonable construction to Sec. 9:4861.B, but if we are left in doubt, we will construe it stricti juris. See Continental Casualty Co. v. Associated Pipe & Supply Co., 310 F.Supp. 1207, 1217-18 (E.D.La.1969) (applying stricti juris construction to Act only when its terms are not clear and unambiguous), aff'd in part and vacated in part, 447 F.2d 1041 (5th Cir.1971).

The question is whether the cleaning and redelivery of a barge used to provide services to oil wells is performed in connection with the operation of the oil wells. We believe that it is. "Connection" means a logical interrelationship, and it is synonymous with "nexus" or "link." United States v. Condren, 18 F.3d 1190, 1195, 1196 n. 18 (5th Cir.) (citing Webster's Ninth New Collegiate Dictionary 278, 797 (1990)), cert. denied, --- U.S. ----, 115 S.Ct. 161, 130 L.Ed.2d 99 (1994). A connection exists between the cleaning and redelivery of the SUARD VIII and the operation of the oil Best contends that our construction of "in connection with" makes Sec. 9:4861.B overly broad. The example it offers is that if the barge had been towed from the well site around the world, under our construction that towing would be covered by the statute. Rather, Best would limit "in connection with" to services offered within the oilfield. Such a construction, however, is technical and not supported by the language of the statute. "Connection" does not suggest any geographical boundary; rather, a connection exists if there is a logical interrelationship or a link with the drilling or operation of the well. We determine that the cleaning of the barge and its immediate redelivery are services performed "in connection with" the operation of the oil wells. We conclude that the last day TLC performed services in connection with Best's reworking of the wells was December 10, 1991. Because Phillips recorded the TLC lien on June 8, 1992, the TLC lien did not prescribe.

wells because Best used the barge to perform its services on the wells. The barge carried Best's equipment. The equipment had to be unloaded and the barge cleaned before it could be redelivered.

B. The Gulf Lien

Gulf furnished fuel to Best's rig during its work in the Bastian Bay Field. Gulf's last delivery to the Field occurred on December 6, 1991. Still, Phillips urges its same argument that we construe the Act broadly. Phillips argues that Best consumed the fuel provided by Gulf by having the SUARD VIII towed back to Lockport. Since Best used the fuel until December 10, Phillips contends that the Gulf lien has not prescribed.

Section 9:4862.A(1)(c) applies to furnishers of fuel. The 180 day period starts to run after the last day such fuel is delivered "to the well or wells." La.Rev.Stat.Ann. Sec. 9:4862.A(1)(c). Under this subsection, the description of the last day of services is specific; the last day is the last day fuel is delivered to the leased property. Gulf last delivered fuel to the wells in the Bastian Bay Field on December 6, 1991. Consequently, the Gulf lien prescribed before Phillips...