Union Texas Petroleum Corp. v. PLT Engineering, Inc.

• Citation: 895 F.2d 1043
• Decision Date: 07 March 1990
• Docket Number: Nos. 88-4823,89-4118,s. 88-4823
• Parties: UNION TEXAS PETROLEUM CORPORATION, Plaintiff, v. PLT ENGINEERING, INC., Defendants, State Service Company, Inc., Defendant-Counter-Plaintiff, POWER WELL SERVICE, INC. and Gulf Island-IV, a Louisiana Partnership, Intervenors-Appellees, v. UNION TEXAS PETROLEUM CORPORATION, Agip Petroleum Company and Minatome Corporation, Counter-Defendants-Appellants. UNION TEXAS PETROLEUM CORPORATION, Plaintiff, v. PLT ENGINEERING, INC., et al., Defendants, Brown and Root USA, Inc. and Sub Sea International, Inc., Defendants-Appellees, and State Service Company, Inc., Defendant-Counter-Plaintiff-Appellee, Union Texas Petroleum Corporation, Agip Petroleum Company and Minatome Corporation, Counter-Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1043

895 F.2d 1043

UNION TEXAS PETROLEUM CORPORATION, Plaintiff, v. PLT ENGINEERING, INC., Defendants, State Service Company, Inc., Defendant-Counter-Plaintiff, POWER WELL SERVICE, INC. and Gulf Island-IV, a Louisiana Partnership, Intervenors-Appellees, v. UNION TEXAS PETROLEUM CORPORATION, Agip Petroleum Company and Minatome Corporation, Counter-Defendants-Appellants.

UNION TEXAS PETROLEUM CORPORATION, Plaintiff, v. PLT ENGINEERING, INC., et al., Defendants,

Brown and Root USA, Inc. and Sub Sea International, Inc.,

Defendants-Appellees,

and

State Service Company, Inc., Defendant-Counter-Plaintiff-Appellee,

Union Texas Petroleum Corporation, Agip Petroleum Company

and Minatome Corporation, Counter-Defendants-Appellants.

Nos. 88-4823, 89-4118.

United States Court of Appeals Fifth Circuit.

March 7, 1990.

Patrick W. Gray, Charles B. Griffis and George Arceneaux, III, Liskow & Lewis, Lafayette, La., for counter-defendants-appellants.

Robert J. Burvant and John T. Nesser, III, Nesser, King & LeBlanc, New Orleans, La., for intervenors-appellees.

Mitchell J. Hoffman, Lowe, Stein, Hoffman & Allweiss, New Orleans, La., for State Service Co.

Robert W. Daigle, Onebane, Donohoe, Bernard, Torian, Diaz, McNamara & Abell, Lafayette, La., for Sub Sea Intern.

Stewart F. Peck, Nathan P. Horner, Lugenhuhl, Burke, Wheaton, Peck & Rankin, New Orleans, La., for Brown & Root USA, Inc.

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

Before BROWN, REAVLEY, and HIGGINBOTHAM, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

On this appeal from the entry of summary judgments, we hold that the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. Secs. 1331-56 (1986 and Supp. III 1989), requires the application of Louisiana state law to non-maritime contract disputes arising from the construction of a gathering line on the seabed of the outer Continental Shelf (OCS). We further hold that the subcontractors were entitled to assert liens against the project under the Louisiana Oil Well Lien Act (LOWLA), LSA-R.S. 9:4861 et seq. The availability of the liens was not defeated by the language of LOWLA or contract provisions. Thus we affirm the summary judgments in favor of the subcontractors.

An Underwater Pipeline

Union Texas Petroleum Corporation (UTP) entered into an offshore construction contract with PLT Engineering, Inc. (PLT). PLT was to design, fabricate, and install a gas transportation system from a platform owned by UTP, and its partners ¹ in the Vermilion Area Block 237 off the coast of Louisiana, to a side tap in the Bluewater Pipeline owned by Columbia Gulf Transmission Company and located in Vermilion Area Block 225. The platform and the pipeline at the point of the side tap are located on the OCS. The gas transportation system was built to function as a gathering line. The line is located in its entirety on the OCS. Completed, it belongs to UTP.

The Contractual Network

In order to complete the gathering line, PLT entered into contracts with Brown & Root USA, Inc., State Service Company, Inc. and Sub Sea International, Inc. Additionally, State Service contracted with Power Well Service, Inc. and Gulf Island IV, a jack-up barge. Brown & Root, State Service, Sub Sea and Power Well are referred to collectively as the subcontractors. Brown & Root was contractually obligated to construct the pipeline by welding together joints of pipe supplied by PLT, to bury the line, and to lay the pipe close to the platform at one end and the Bluewater Pipeline at the other. Brown & Root performed labor and services and furnished materials, equipment and supplies including a barge. After Brown & Root had laid the gathering line, State Service was to fabricate and install tap assemblies to connect it to the platform and the Bluewater Pipeline. State Service also did some burial and testing work using divers. It worked from vessels and chartered Power Well's Gulf Island IV in connection with its work on the project. Sub Sea provided inspection services performed by divers, to ensure that the other subcontractors complied with contractual specifications. Sub Sea provided vessels for these divers to work from. Most of the work done under the subcontracts took place on the ocean floor or on a riser on UTP's platform. Some vessels were used for transportation of men and facilities. Others afforded living facilities. The Gulf Island IV was used to fulfill contract obligations.

PLT eventually completed and tested the line. However, through communications with some of the subcontractors, UTP learned that PLT had not paid the subcontractors. Accordingly, UTP invoked the contract provision that allowed it to withhold money from the amount due under the contract with PLT. UTP withheld $420,045.59 then instituted an interpleader action under F.R.Civ.P. 22 to enable PLT and the subcontractors to determine how the money should be allocated among them. Each of the subcontractors answered and filed counterclaims asserting liens.

After cross motions for summary judgment, the trial court issued a Memoranda Ruling. It held that (i) LOWLA ² was applicable, (ii) the choice of law provisions in the subcontracts ³ could not be enforced by UTP because of a lack of privity, (iii) federal admiralty law was not applicable because the activities involved were not traditionally maritime and thus OCSLA applied, and (iv) recordation requirements for the liens were sufficiently complied with by filing in adjacent parishes and with the Department of the Interior's Mineral Management Division. The trial court then dismissed the interpleader action as inappropriate since LOWLA was applicable. The district court retained jurisdiction under 43 U.S.C. Sec. 1349(b)(1) and 28 U.S.C. Sec. 1331. Eventually final judgments were entered in favor of each of the subcontractors. ⁴ Without challenging the correctness of the subcontractors' claims or the receipt of their value, UTP appeals from all aspects of the trial court's rulings.

Breathing Salt Air

The trial court held that Louisiana law, rather than maritime law applied to these contracts by operation of the Outer Continental Shelf Lands Act (OCSLA). 43 U.S.C. Secs. 1331-1356 (1986 & Supp III 1989). UTP argues that OCSLA cannot apply to work performed in a maritime setting on the high seas. It places a great deal of reliance on the recent Supreme Court decision in Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 106 S.Ct. 2485, 91 L.Ed.2d 174 (1986). We agree with the trial court and hold that Tallentire does not impose the application of maritime law in this case.

OCSLA provides in pertinent part:

(1) The Constitution and laws and civil and political jurisdiction of the United States are hereby 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....

(2)(A) To the extent that they are applicable and not inconsistent with this subchapter or with other Federal laws and regulations of the Secretary now in effect or hereafter adopted, the civil and criminal laws of each adjacent State, now in effect or hereafter adopted, amended, or repealed are hereby declared to be the law of the United States for that portion of the subsoil and seabed of the outer Continental Shelf, and artifical islands and fixed structures erected thereon, which would be within the area of the State if its boundaries were extended seaward to the outer margin of the outer Continental Shelf....

43 U.S.C. Sec. 1333(a) (1986).

Rodrigue v. Aetna Casualty and Surety Co., 395 U.S. 352, 355-56, 89 S.Ct. 1835, 1837-38, 23 L.Ed.2d 360, 364 (1969), said:

The purpose of the Lands Act was to define a body of law applicable to the seabed, the subsoil, and the fixed structures ... on the outer Continental Shelf. That this law was to be federal law of the United States, applying state law only as federal law and then only when not inconsistent with applicable federal law, is made clear by the language of the Act. (Emphasis added.)

Rodrigue made clear that "for federal law to oust adopted state law, federal law must first apply." 395 U.S. at 359, 89 S.Ct. at 1839, 23 L.Ed.2d at 366. But for adjacent state law to apply as surrogate federal law under OCSLA, three conditions are significant. (1) The controversy must arise on a situs covered by OCSLA (i.e. the subsoil, seabed, or artifical structures permanently or temporarily attached thereto). (2) Federal maritime law must not apply of its own force. (3) The state law must not be inconsistent with Federal law. All of these conditions are met in this case.

UTP argues that all of the subcontractors' contracts for the building and completion of the pipeline called for services which were provided from vessels and by divers in the ocean, not on a platform, and therefore were not in areas covered by OCSLA. Perhaps in a more traditional approach, the contention comes down to an assertion that these collective contracts were maritime in nature and thus subject exclusively to admiralty law. On both grounds we disagree.

In the first place, the gathering line exactly fits the statutory definition of an "other device[ ] permanently or temporarily attached to the seabed ... erected thereon for the purpose of ... developing, or producing resources therefrom." 43 U.S.C. Sec. 1333(a)(1). In addition, the gathering line was buried beneath the ocean floor. It was connected to a platform at one end. It was connected to a transmission line at the other. The locations where the substantial work was done were...