Grand Isle Shipyard, Inc. v. Seacor Marine, LLC

• Citation: 543 F.3d 256
• Decision Date: 22 September 2008
• Docket Number: No. 07-31019.,07-31019.
• Parties: GRAND ISLE SHIPYARD, INC.; Gray Insurance Company, Plaintiffs-Appellees, v. SEACOR MARINE, LLC, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

543 F.3d 256

GRAND ISLE SHIPYARD, INC.; Gray Insurance Company, Plaintiffs-Appellees, v. SEACOR MARINE, LLC, Defendant-Appellant.

No. 07-31019.

United States Court of Appeals, Fifth Circuit.

September 22, 2008.

Robert S. Reich (argued), Reich, Album & Plunkett, LLC, Metairie, LA, for Plaintiffs-Appellees.

Gary Alan Hemphill (argued), Phelps Dunbar, New Orleans, LA, for Defendant-Appellant.

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

Before GARZA and DENNIS, Circuit Judges, and MILLS,^* District Judge.

MILLS, District Judge:

Seacor Marine, LLC appeals the district court's grant of summary judgment to appellees Grand Isle Shipyard and Gray Insurance Company ("Gray") in the instant declaratory judgment action. We hold that the district court erred in concluding that the Outer Continental Shelf Lands Act, 43 U.S.C. 1331, et seq. ("OCSLA"), applies to an accident involving an offshore platform worker being transported by a vessel on the high seas. The district court therefore erred in applying the provisions of the Louisiana Oilfield Indemnity Act, LA.REV.STAT. ANN. § 9:2780A ("LOIA") as surrogate federal law under OCSLA to invalidate the indemnity agreement in this case. Concluding that general maritime law applies instead, we vacate the district court's order invalidating the indemnity agreement and remand for additional proceedings.

FACTS AND PROCEEDINGS BELOW

This declaratory judgment action involves an indemnity dispute between Grand Isle and Seacor, two contractors of BP American Production Company ("BP"). Grand Isle's contracting duties involved the repair and maintenance of BP's offshore platforms, while Seacor's duties involved the transporting of workers for BP and its contractors. The indemnity dispute in this case arises from an April 2005 incident in which Denny Neil, a Grand Isle employee, was injured in a fall onboard the M/V SEA HORSE IV, a vessel owned and operated by Seacor. At the time of the accident, the SEA HORSE IV was transporting Neil from his work platform to the residential platform which contained his living quarters. Deposition testimony indicated that the vessel was in close proximity to the residential platform at the time of the accident, but it is undisputed that neither Neil nor the SEA HORSE IV were in physical contact with the platform when the accident occurred.

Neil filed suit against Seacor in the U.S. District Court for the Southern District of Texas, asserting a claim for vessel negligence under § 905(b) of the Longshore and Harbor Worker's Compensation Act ("LHWCA"). Seacor tendered its defense and indemnity to Grand Isle; Seacor also claimed the benefit of insurance provided by Grand Isle's insurer Gray. On March 17, 2006, Grand Isle and Gray filed suit in the U.S. District Court for the Eastern District of Louisiana, seeking a declaratory judgment that: (1) Grand Isle is not contractually obligated to defend and indemnify Seacor; and (2) Seacor is not entitled to insurance coverage from Gray.

Grand Isle and Gray subsequently filed motions for summary judgment in which they argued (1) that by virtue of OCSLA, the LOIA applies as surrogate federal law in this case, thus invalidating the contractual indemnity provision at issue here; and (2) that § 905(b) of the LHWCA is applicable to the case and prohibits enforcement of the indemnity provision. Seacor filed its own cross motion for summary judgment maintaining that general maritime law governs the dispute and noting that nothing in that law prohibits the indemnity agreement at issue here. On September 26, 2007, the district court issued a summary judgment order in which it held that Louisiana law does apply in this case and that the LOIA bars Seacor from asserting its indemnity and insurance claims against Grand Isle and Gray. The district court accordingly granted Grand Isle and Gray's motions for summary judgment, and Seacor timely appealed the ruling to this court.

ANALYSIS

This case presents an issue of law of some significance in our maritime jurisprudence. The primary legal issue on appeal involves whether Louisiana state law, in particular the LOIA, applies to void the indemnity obligations contained in the contract between BP and Grand Isle. BP included virtually identical indemnity provisions in its contracts with Grand Isle and Seacor, and neither party disputes that BP sought thereby to impose reciprocal indemnity obligations among its contractors.¹ The question in this case is, instead, whether BP's clear indemnity provision is nevertheless invalidated by the equally clear provisions of the LOIA.

In enacting the LOIA, the Louisiana legislature explained that its intent was "to declare null and void and against public policy of the state of Louisiana any provision in any agreement which requires defense and/or indemnification, for death or bodily injury to persons, where there is negligence or fault (strict liability) on the part of the indemnitee, or an agent or employee of the indemnitee, or an independent contractor who is directly responsible to the indemnitee." LA.REV.STAT. ANN. § 9:2780A. The Supreme Court of Louisiana has observed that the LOIA "arose out of a concern about the unequal bargaining power of oil companies and contractors and was an attempt to avoid adhesionary contracts under which contractors would have no choice but to agree to indemnify the oil company, lest they risk losing the contract." Fontenot v. Chevron U.S.A., Inc., 676 So.2d 557, 563 (La.1996).

The parties agree that if the LOIA applies, then this law would serve to void the indemnity provision at issue in this case. It is well settled that for Louisiana law to apply as surrogate federal law under OCSLA, the three conditions established by this court in Union Texas Petroleum Corp. v. PLT Engineering, Inc., 895 F.2d 1043 (5th Cir.1990) must be met. These three conditions are that (1) the controversy must arise on a situs covered by OCSLA (i.e. the subsoil, seabed, or artificial structures permanently or temporarily attached thereto); (2) federal maritime law must not apply of its own force; and (3) the state law must not be inconsistent with federal law.

We conclude that the OCSLA situs requirement is not met in this case, and it is accordingly unnecessary to consider whether the remaining two PLT Engineering conditions are met. Section 1333(a)(1) of OCSLA sets forth a statutory situs requirement, as follows:

(1) The Constitution and laws and civil and political jurisdiction of the United States are extended to the subsoil and seabed of the outer Continental Shelf and to all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources therefrom, or any such installation or other device (other than a ship or vessel) for the purpose of transporting such resources, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State: Provided, however, that mineral leases on the outer Continental Shelf shall be maintained or issued only under the provisions of this subchapter.

In the 2002 decision of Demette v. Falcon Drilling Co., Inc., 280 F.3d 492 (5th Cir. 2002), we comprehensively examined the scope of the § 1333(a)(1) situs requirement for the first time, observing that:

[T]he OCSLA draws important distinctions between the two categories of artificial islands, installations, and other devices. Each category is defined by the purpose of the device-the former, extraction of resources; the latter, transportation of resources. The former also includes the phrase, "which may be erected [on the OCS]," while the latter does not. Conversely, the latter contains the phrase, "other than a ship or vessel," while the former does not.

Demette, 280 F.3d at 497.

In accordance with these observations, we held in Demette that:

We incorporate these distinctions into the following rule:

The OCSLA applies to all of the following locations:

(1) the subsoil and seabed of the OCS;

(2) any artificial island, installation, or other device if

(a) it is permanently or temporarily attached to the seabed of the OCS, and

(b) it has been erected on the seabed of the OCS, and

(c) its presence on the OCS is to explore for, develop, or produce resources from the OCS;

(3) any artificial island, installation, or other device if

(a) it is permanently or temporarily attached to the seabed of the OCS, and

(b) it is not a ship or vessel, and

(c) its presence on the OCS is to transport resources from the OCS.

Id.

Based on Demette, it is apparent that the SEA HORSE IV does not qualify as an OCSLA situs within the meaning of § 1333(a)(1).² That is, the vessel does not qualify as either "the subsoil and seabed of the [OCS]," an "artificial island," or an "installation ... permanently or temporarily attached to the seabed." Indeed, as to the latter category, § 1333(a)(1) specifically excludes "a ship or vessel" used for "transport[ing] resources from the OCS" from being a potential OCSLA situs.

In holding that the situs requirement was met in this case, the district court did not apply our holding in Demette, instead relying upon older authority which we conclude, for reasons discussed below, to be factually distinguishable from this case.³ The district court likewise did not apply the Supreme Court's analysis in Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 106 S.Ct. 2485, 91 L.Ed.2d 174 (1986), which we deem to be controlling in this case. In Tallentire, two platform workers were killed in a crash on the high seas of a helicopter which had been transporting them from the offshore drilling platform where they worked to their home base in Louisiana. Tallentire, 477 U.S. at 209, 106 S.Ct. 2485. The survivors of the workers argued that they were entitled to damages based on the Louisiana...