Hyde v. Chevron U.S.A., Inc., 81-3200

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Citation697 F.2d 614
Docket NumberNo. 81-3200,81-3200
PartiesGerald M. HYDE, Jr., Plaintiff-Appellee Cross-Appellant, and Employers National Insurance Company, Intervenor-Appellee, v. CHEVRON U.S.A., INC., Defendant-Appellant Cross-Appellee, v. POOL OFFSHORE and Jeremy Hew Phillips, Third Party Defendants-Appellees.
Decision Date07 February 1983

Lloyd C. Melancon, New Orleans, La., for Chevron U.S.A., Inc.

John D. Schoonenberg, Houma, La., for Hyde.

Ronald A. Johnson, New Orleans, La., for Pool Offshore.

Patrick E. O'Keefe, Richard A. Sabalot, New Orleans, La., for Employers Nat. Ins. Co. (intervenor).

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

Before BROWN, WISDOM and RANDALL, Circuit Judges.

WISDOM, Circuit Judge:

This diversity action is controlled by Louisiana law. The core of this appeal is the district court's imposition of strict liability on Chevron U.S.A., Inc. (Chevron), owner of an offshore drilling platform, for injuries sustained by Gerald Hyde, an oil worker employed by the drilling contractor, Pool Offshore Company (Pool). Hyde was injured in an accident on the platform. The district court held that the accident was caused by the "failure" of the last step of a staircase on the platform "in combination with another cause (plaintiff's initial slip)". The trial court, sitting without a jury, found, using the language of article 2322 of the Louisiana Civil Code, that the injury was "occasioned" by the "ruin" of a building, for which Chevron was strictly liable. Hyde v. Chevron U.S.A., Inc., E.D.La.1981, 514 F.Supp. 740. The court also held that an indemnity agreement Chevron had with its drilling contractor should not be construed to require Pool to indemnify Chevron. Chevron appeals from both of these rulings and Hyde cross-appeals from the allegedly insufficient award of damages. We affirm in part, reverse in part, and remand the case to the district court.

I.

On September 16, 1976, Chevron and Pool entered into an agreement for Pool to perform workover operations on certain Chevron oil wells located in the Gulf of Mexico. Under the agreement, Pool was to use one of its rigs on a Chevron offshore platform and furnish all crews, labor, equipment, and supplies in placing the rig on the platform and in conducting its drilling operations. Paragraph 7 of the agreement provided that Pool "shall be responsible for, and shall defend, indemnify and hold [Chevron] harmless from and against, any claims for damages for loss or destruction of property of [Pool], or for injury to, impairment of health of, or death of employees of [Pool] ... that may arise from [Pool]'s operations under this agreement." Paragraph 8 provided that Pool "agrees that all of its operations ... are those of an independent contractor and that it is not, and none of its employees, are, an employee" of Chevron.

In accordance with the agreement, Pool moved its Workover Rig No. 2 onto one of Chevron's offshore platforms, permanently attached to the floor of the Gulf of Mexico. Pool Rig No. 2 consisted of a drilling rig, mud pumps, draw works, living quarters, and galley. Because of lack of space on the platform the living quarters were placed on top of the galley instead of being placed in the usual position on a side of the galley. Pool brought in one of its metal staircases from another location to enable the crew to go to and from the rig's living quarters. The staircase was welded to the living quarters at the top and to the main deck at the bottom. It was necessary, however, to weld an additional step to the staircase. Pool's subcontractor performed the welding work. 1 The district court found that the staircase was unusually steep.

On May 10, 1977, the first day on the job, Hyde, a derrickman and relief driller, was descending the stairs in a drizzling rain when he slipped on the third step from the bottom of the staircase. When his feet reached the last step it gave way and Hyde landed on the deck on his lower back and buttocks. As a result of the accident, Hyde underwent surgery on three occasions and experienced severe pain and suffering.

Hyde filed suit against Chevron alleging negligence under article 2315 2 and strict liability under article 2322 of the Louisiana Civil Code. Chevron filed a third party complaint against Pool and Pool's insurer, Underwriters at Lloyd's, London, seeking indemnity under the terms of the workover agreement. Employer's National Insurance Co., the compensation insurer for Pool, intervened to recover compensation payments paid to Hyde.

The trial court made no finding with regard to negligence under article 2315, but found Chevron strictly liable under article 2322 for Hyde's injuries and awarded $218,920.23 in damages. 3 Of this amount, the court attributed $45,000 to past and future pain and suffering, $50,765.43 to loss of past wages, $100,000 to future lost wages, and $23,155.40 to medical expenses. The trial court denied Chevron's third-party indemnity demand against Pool and Pool's insurer.

Chevron attacks both holdings of the trial court. As to strict liability, Chevron argues that the court erred in finding that the broken step rendered the staircase/platform a "ruin" as required by article 2322. Alternatively, Chevron argues that the step was not the cause of Hyde's injuries and that, even if it was, Pool's or Hyde's concurrent negligence bars Hyde's recovery under article 2322. Finally, Chevron contends that the indemnity clause of the work-over agreement requires a finding in its favor on the indemnity issue. Hyde filed a cross-appeal questioning the adequacy of the damages awarded.

II.

The Outer Continental Shelf Lands Act, 43 U.S.C. Secs. 1331-1343 (1976 & Supp. III, 1979), mandates that state (here Louisiana) law be applied to fixed offshore structures such as the platform involved in this case. Rodrigue v. Aetna Casualty & Surety Co., 1969, 395 U.S. 352, 89 S.Ct. 1835, 23 L.Ed.2d 360. Federal courts, therefore, have had to confront difficult questions concerning the interpretation of state law as it applies to personal injuries on offshore drilling platforms. The difficulty is compounded by the uniqueness of the Louisiana law of strict liability for accidents caused by "defective" things. It is not "strict liability" as it is found in the common law or in the Restatement (Second) of Torts Sec. 402A (1965), although the Louisiana doctrine as articulated in many of the key opinions smacks of the Restatement and, indeed, Sec. 402A is often cited. To make matters worse, the Louisiana cases in this field, no less than the federal cases, are not distinguished for their consistency.

Article 2317 of the Louisiana Civil Code defines strict liability. Until the Louisiana Supreme Court decided Loescher v. Parr, La.1975, 324 So.2d 441, courts regarded the article as transitional rather than having substantive force of its own subjecting a custodian to strict liability. Articles 2318-2322 provide specific instances in which a person may be held liable for damage caused by a person or thing in his custody. These articles and Article 2317 are substantially identical with their antecedents in the Louisiana Codes of 1870, 1825, and 1808 and the Code Napoleon. Article 2317 provides:

We are responsible, not only for the damage occasioned by our act, but for that which is caused by the act of persons for whom we are answerable, or of things which we have in our custody. This, however, is to be understood with the following modifications.

The modification controlling this action is article 2322. This article provides:

The owner of a building is answerable for the damage occasioned by its ruin, when this is caused by neglect to repair it, or when it is the result of a vice in its original construction.

No inference of a requirement of the owner's negligence or culpability should be drawn from the word "neglect". The history of Article 2322 demonstrates beyond doubt that the word is a synonym for "failure", whether or not caused by negligence. 4 The article departs "from the normal standard of delictual responsibility by predicating liability upon the existence of particular fact situations instead of upon 'fault' of the person held responsible. 5 In short, nothing prevents an unequivocal declaration that article 2322 establishes a rule of strict liability or liability without fault." Comment, Article 2322 and the Liability of an Immovable, 42 Tul.L.Rev. 179 (1967). 6

Notwithstanding the application of the term "strict liability" 7 to articles 2317 and 2322, under both articles the liability of the owner of a thing (article 2317) or "building (article 2322) is not absolute". Gaudet, The Application of Louisiana's Strict Liability Law on the Outer Continental Shelf: A Quandary for Federal Courts, 28 Loyola L.Rev. 101, 116 (1982). The owner is absolved from liability by three defenses: (1) the fault of the victim; (2) the fault of some third party (who must be a "stranger" rather than a person acting with the consent of the owner); and (3) an irresistible force. Loescher v. Parr, La.1975, 324 So.2d 442. Loescher, now regarded as the seminal decision for the current Louisiana doctrine of fault under 2317 and 2322 8 and analogous articles, has added the "unique requirement" 9 that the injurious thing must be shown to be "defective". Judge, then Justice, Tate, speaking for the Louisiana Supreme Court, stated:

When harm results from the conduct or defect of a person or thing which creates an unreasonable risk of harm to others, a person legally responsible for the supervision, care, or guardianship of the person or thing may be held liable for the damage thus caused, despite the fact that no personal negligent act or inattention on the [owner's] part is proved. The liability arises from his legal relationship to the person or thing whose conduct or defect creates an unreasonable risk of injuries to others. 10

324 So.2d at 446.

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