95 1820 La.App. 1 Cir. 8/22/97, Petroleum Rental Tools, Inc. v. Hal Oil & Gas Co., Inc.

• Decision Date: 22 August 1997
• Parties: 95 1820 La.App. 1 Cir
• Court: Court of Appeal of Louisiana — District of US

Page 213

701 So.2d 213

95 1820 La.App. 1 Cir. 8/22/97

PETROLEUM RENTAL TOOLS, INC. v. HAL OIL & GAS COMPANY, INC., et al.

RON B. BRIDGES & ASSOCIATES, INC. v. HAL OIL & GAS COMPANY, INC. et al.

Nos. 95 CA 1820 R, 95 CA 1821 R.

Court of Appeal of Louisiana First Circuit.

Aug. 22, 1997.

Rehearing Denied Nov. 12, 1997.

Lee A. Archer, Lake Charles, for Plaintiffs Petroleum Rental Tools, Inc., Ron B. Bridges & Associates, Inc.

Robert L. Redfearn and Robert L. Redfearn, Jr., New Orleans, and L. Linton Morgan, Covington, for Defendant Hal Oil & Gas Company, Inc.

Milo A. Nickel, Jr., Lake Charles, for Defendant Tadlock Pipe & Equipment, Inc.

Before WATKINS and FOIL, JJ., and TANNER, ¹ J. Pro Tem.

[95 1820 La.App. 1 Cir. 2] WATKINS, Judge.

This case is before us on remand from the Louisiana Supreme Court, with instructions to consider the percentage of fault attributable to Tadlock Pipe and Equipment, Inc., (Tadlock) as a nonparty to this tort suit pursuant to LSA-C.C.P. art. 1812. Hal Oil and Gas Company, Inc. (Hal Oil) sued Tadlock in redhibition, and the trial court found that the casing which Tadlock supplied was defective and not fit for its intended use. The trial court rendered judgment in favor of Hal Oil in the amount of $94,560.00, the cost of the casing. Tadlock appealed, and we affirmed that holding in the original, unpublished opinion, 96 CA 1819. However, Hal Oil did not sue Tadlock under any theory other than redhibition, such as negligence, strict liability, or product liability; nor did Hal Oil appeal the judgment in its favor which was limited to the cost of the casing and did not include damages occasioned by the redhibitory defect.

Tadlock was made a third party defendant by Ron D. Bridges and Associates, Inc. (Bridges), which alleged that the casing as supplied was not properly tested or inspected and was defective, mislabeled and/or not suited for its intended purposes, and that Tadlock was or should have been aware of the defect. Bridges further alleged that Tadlock did not advise Bridges that the casing was defective and/or not suited for its intended purpose. On remand, we were instructed further by the Louisiana Supreme Court to reconsider whether the dismissal of Bridges's third party demand against Tadlock was preserved on appeal.

FACTS

We will briefly reiterate the facts, which were summarized in our original opinion. This case involved property damage to the FINA No. 1 well, an oil well being drilled by defendant and plaintiff in reconvention, Hal Oil. Defendant in reconvention, Bridges, was engaged by Hal Oil as an operator's representative to represent Hal Oil in the drilling and completion operations. Mr. Bridges is a drilling engineer.

In the first week of December, 1989, Mr. Bridges requested 20 bids for both new and used casing which was to be utilized in the drilling operation. He requested a string of 5.5-inch casing and a string of 7-inch casing. He received in response 15 bids for new casing and three for used casing. After the log for the initial drilling operation was presented, it appeared the well was not as large as originally had been anticipated. According to Mr. Bridges, it was "a marginal well from the very beginning."

[95 1820 La.App. 1 Cir. 3] After the preliminary log came in, a meeting was held between the following persons who decided to buy the 5.5-inch casing from Tadlock: Hal Callais, the owner of Hal Oil; Dick Guidry, the president of Hal Oil; a representative of Inland Bay; and Mr. Bridges. Mr. Callais testified that Mr. Bridges was supposed to look after the interests of Hal Oil, represent the company, make recommendations, and advise the company. Mr. Bridges initially testified that he was not part of the decision as to what type of casing would be used in an attempt to complete the well. However, he eventually testified that he did recommend Tadlock, based on the "best availability and deliverability." Tadlock's price was the highest of the three companies that bid to supply used casing.

The Tadlock casing had been hydrostatically tested, to show if it had any leaks or thin places, and to show if the connections were holding, and it had been drifted. Drifting indicates whether the casing is within APO premium grade to standard. It had not, however, been electronically inspected, which determines if there are any thin walls or nicks inside the pipe that are not observable by visual inspection. The record showed that electronic inspection would take three days to perform. Mr. Bridges testified he did not, as a practice, have tests performed on pipe he did not own. He did not recommend to Hal Oil that the pipe be electronically inspected.

The supplier delivered the casing to the drilling site on the night of December 21, 1989. The weather was bitterly cold, with temperatures around seven degrees. At 7:30 a.m. on December 27, 1989, the drilling crew started running the 5.5-inch casing. At 9,720 feet, the casing "sat down on a ledge" in the hole. The crew picked up the pipe three times in an attempt to get it to roll off the ledge and continue in the hole. At the fourth try, the pipe stuck on bottom. Mr. Bridges testified that he pulled the casing at a weight of 275,000 pounds when it separated in two and fell to the bottom of the hole. The oil field standard is that casing should never be pulled at a weight above 80 percent of its rated API strength. For the Tadlock casing at issue, that weight was 348,000 pounds; 80 percent of that weight is 278,400 pounds.

Mr. Bridges attempted several operations in order to cement the productive zones near the bottom of the well. Using 2 7/8-inch workstring which he obtained from his own company, Petroleum Rental Tools, Inc. (Petroleum), he tried to mill the hole, but was not successful.

On or near January 6, 1990, Larry Hargrave replaced Mr. Bridges on the well site to attempt a salvage operation on the well. Mr. Hargrave was performing a "primary cement job," [95 1820 La.App. 1 Cir. 4] using a cement retainer and a stinger. The stinger is screwed onto the end of the workstring and is run down the well to the retainer. The stinger opens the retainer's check valve, and cement is pumped through the workstring and stinger into the area between the cement retainer and a float collar, and then out through perforations. When the stinger is pulled out, the check valve closes and cement is thus prevented from flowing back into the casing.

Mr. Hargrave stung into the retainer, established circulation, and began pumping cement. When he attempted to pull the stinger out of the retainer, the workstring parted 20 feet below the rig floor. The cement then flowed back into the casing. Because part of the workstring was then cemented into the well, the well could no longer be salvaged.

Mr. Hargrave testified that before the workstring parted, he thought the well could be salvaged. An expert for Hal Oil and an expert for Bridges gave their opinions as to the chances of saving the well after the casing parted and after the cement job was performed.

The trial court found that the 5.5-inch casing supplied by Tadlock had a redhibitory defect. It found that Tadlock's waiver of implied warranty was invalid and awarded judgment for the cost of the casing.

The trial court further held that the workstring supplied by Petroleum was defective because it failed at less than 80 percent of its tensile strength, and that Petroleum was the manufacturer because it modified the workstring. The trial court also found that Petroleum, as the lessor of the workstring, was strictly liable for its defects. Petroleum was granted a credit in the amount of $50,233.45 to be offset against Hal Oil's judgment against it, representing rentals due for part of the workstring which Hal Oil had recovered from the failed well and used in another drilling operation.

As for Mr. Bridges, the court ruled that he was negligent "in recommending the casing, failing to explain the risks of the casing to Hal so that they can make an intelligent assessment of their risks, failure to advise Hal as to the possibilities and uses of the electronic inspection of the ... casing." The trial court allocated fault equally between Bridges and Petroleum, finding them solidarily liable to Hal Oil for damages in the amount of $1,112,850.54, but assigned no fault to Tadlock for the loss of the well. Bridges, Petroleum, and Tadlock appealed from the judgments against them.

On appeal, we affirmed the judgment of the trial court, except the finding that Bridges [95 1820 La.App. 1 Cir. 5] and Petroleum were solidarily liable to Hal Oil. We also found that Bridges did not appeal the dismissal of its third party demand against Tadlock, asserting claims for indemnity or contribution.

In their application to the Louisiana Supreme Court for writs, Petroleum and Bridges argued that fault should have been apportioned to Tadlock, because both the lower court and this court found that the casing supplied by Tadlock was defective and contributed to the loss of the well. Mr. Bridges also argued that it was error to find that he owed a duty to warn Hal Oil of the risks inherent in used casing and to advise that the casing be tested. Petroleum also argued that it was error to hold that the workstring was defective or unreasonably dangerous.

APPORTIONMENT OF FAULT TO TADLOCK

The Louisiana Supreme Court ordered that we consider Tadlock's percentage of fault as a nonparty to the reconventional demand brought by Hal Oil against Bridges and Petroleum. One pertinent article is LSA-C.C.P. art. 1812, which reads, in part:

C. In cases to recover damages for injury, death, or loss, the court at the request of any party shall submit to the jury special written questions inquiring as to:

* * * * * *

(2)(a) If appropriate under the facts adduced at trial, whether another party or nonparty, other than the person suffering injury, death, or loss, was at fault, and, if so:

(i) Whether such fault...