953 F.2d 985 (5th Cir. 1992), 91-3135, Transcontinental Gas Pipe Line Corp. v. Transportation Ins. Co.

Docket Nº:91-3135.
Citation:953 F.2d 985
Party Name:TRANSCONTINENTAL GAS PIPE LINE CORPORATION, Plaintiff-Appellee, v. TRANSPORTATION INSURANCE COMPANY, Intervenor-Appellant, Lloyds, London, Northern Assurance Company, Ltd., No. 6 A/c, Minster Insurance Company, Ltd., No. 3 A/c, Bishopsgate Insurance PLC.
Case Date:April 03, 1992
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 985

953 F.2d 985 (5th Cir. 1992)




Lloyds, London, Northern Assurance Company, Ltd., No. 6 A/c,

Minster Insurance Company, Ltd., No. 3 A/c, Bishopsgate

Insurance PLC. "M" A/c, Yorkshire Insurance Company, Ltd.

"T", Ocean Marine Insurance Company, Ltd., Commercial Union

Assurance Company, London and Hull Maritime Insurance

Company, Ltd., Hansa Marine Insurance Company, (UK), Ltd.,

Vesta (UK) Insurance Company, Ltd., "T" A/c, Chancellor

Insurance Company, Ltd., National Employers Mutual Insurance

Association, Ltd., Defendants-Appellants.

No. 91-3135.

United States Court of Appeals, Fifth Circuit

April 3, 1992

Opinion on Rehearing and Rehearing Feb. 20, 1992.

Page 986

James H. Roussell, Sheryl Bey, Phelps, Dunbar, Marks, Claverie & Sims, New Orleans, La., for Lloyds.

James M. Tompkins, Michael W. Magner, Galloway, Johnson, Tompkins & Burr, New Orleans, La., for Transp. Ins.

Hal J. Broussard, Lafayette, La., for amicus, La., Oilfield Contractors Asso., et al.

Gary A. Bezet, Charles S. McCowan, III, Kean, Miller, Hawthorne, Darmond, McCowan & Jarman, Baton Rouge, La., for Transcontinental Gas Pipe Line Corp.

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

Before REYNALDO G. GARZA, WIENER, and BARKSDALE, Circuit Judges.

WIENER, Circuit Judge:

This case is another in the burgeoning line of litigation hinging on the interpretation of the Louisiana statute that proscribes indemnification provisions in agreements pertaining to oil, gas and water wells. At issue here is the applicability of the statute to an interstate gas transmission pipeline company's unmanned platforms in the Gulf of Mexico--platforms admittedly unrelated to exploration, drilling or completing gas wells, but admittedly related directly to transportation of natural gas. The Defendants-Appellants appeal from the district court's summary judgment in favor of Plaintiff-Appellee, Transcontinental Gas Pipe Line Corporation (Transco), grounded in the court's determination that the subject statute is inapplicable here. Because we find the uncontested facts revealed in the summary judgment evidence in the record to be insufficient for us to make a de novo determination of the statute's applicability, we reverse and remand.



Transco is an interstate natural gas transmission and marketing company. Among other things, it owns and operates natural gas pipelines originating in the Gulf Coast areas of Texas and Louisiana and extending through the southeastern states. Transco avers that it does not own or operate natural gas wells. Instead, it purchases natural gas from those persons who drill, produce or operate natural gas wells, transports that gas through its pipeline from the well or from some pickup point remote from the well, such as the tail gates of plants or other facilities, to Transco's gas purchasers throughout the southeastern United States. Transco also avers that as a common carrier it receives gas purchased by third parties from producers whose wells are located in the Offshore Louisiana area and transports that gas, for a fee, as directed by the purchasers of that gas.

In 1987, APS was a Louisiana contractor providing painting, sandblasting, and other services to the oilfield industry. On May 20, 1987, APS and Transco entered into a contract (the contract or the APS/Transco contract) under which APS agreed to perform painting, sandblasting, inspection and "codework" on Transco's platforms and pipelines located in the Gulf of Mexico or in the adjacent marshlands of Louisiana. The contract contained an Insurance Requirement Exhibit that provides: "It is further

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agreed that [APS's comprehensive general liability insurance policy] shall name [Transco] ... as an Additional Insured ... with respect to [APS's] operations hereunder." APS named Transco as an additional insured on its comprehensive general liability insurance policy.

On or about May 20, 1987, a foreman for APS was injured on a Transco platform located on the Outer Continental Shelf offshore Louisiana. This employee filed suit in the United States District Court for the Eastern District of Louisiana against APS, Transco and other parties. Transco's demand to APS for indemnification and defense was denied. APS filed for bankruptcy and the court proceedings as to APS were stayed. Transco settled the suit with the injured worker for $225,000.00.

Transco then filed suit against the Defendants alleging that the APS/Transco contract required that Transco be named as an additional insured under the comprehensive general liability policy issued by the Defendants to APS, and that the Defendants' failure to defend and indemnify Transco with respect to the suit by APS's worker was without justification and was arbitrary and capricious. Transco sought indemnity for the amount paid in the settlement, plus penalties and attorney's fees pursuant to Louisiana law. Transco also sought a declaratory judgment that Transportation Insurance Company (TIC), the worker's compensation insurer of APS, was not entitled to reimbursement for compensation benefits it paid to the insured worker.

The Defendants and TIC filed motions for summary judgment. The district court denied those motions 1 addressing only the issue of the applicability of the Louisiana Oilfield Anti-Indemnity Act. 2 Subsequently, the Defendants and TIC moved the district court to amend its judgment and certify to the Louisiana Supreme Court the issue of the applicability of the Act to the instant contract. After the district court requested additional briefing, Transco opposed the motions. Ultimately, the district court refused to amend its judgment.

Transco then filed a motion for summary judgment on the remaining issue of the scope of coverage provided by the Defendants' insurance policy. The Defendants and TIC opposed Transco's motion for summary judgment. In addition, the Defendants requested that the court review its prior ruling on the applicability of the Act to the contract between APS and Transco. The court (1) found that there were no adequate grounds to reconsider its prior decision regarding the applicability of the Act to the contract, and (2) granted Transco's motion for summary judgment on the issue of the scope of coverage provided by the insurance policy.

The district court entered its judgment against the Defendants in the amount of $225,000 plus interest. The Defendants timely appealed the district court's judgment. After the appeal was filed, we granted the request of the Louisiana Oilfield Contractors Association and the Louisiana Pipeline Contractors Association (the amici curiae ) to file a brief in support of the Defendants' position on the coverage of the Act.



As far as they go, the facts of this case are not disputed. The sole issue is one of the applicability of a statute. As such, we review the decision of the district court de novo.

The accident that gave rise to this litigation occurred off the Louisiana coast on a fixed platform located on the Outer Continental Shelf. Federal law applies to the Outer Continental Shelf by reason of the Outer Continental Shelf Lands Act (OCSLA). 3 In OCSLA, Congress directed application

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of the laws of adjacent states. 4 We, therefore, apply Louisiana law in this case. 5

In order to determine state law, federal courts look to final decisions of the highest court of the state. When there is no ruling by the state's highest court, it is the duty of the federal court to determine as best it can, what the highest court of the state would decide. 6 Furthermore, as a "Lands Act" court, we are bound, as we are in any other case decided under federal law, by prior determinations of the United States Supreme Court and determinations of this court directly applicable to the issues in this case.

The Louisiana Supreme Court has not interpreted the provisions of the Act with regard to whether the Act applies to contracts concerning natural gas transmission pipelines as such. Likewise, we find no prior Fifth Circuit cases directly applicable to this issue. 7 Therefore, it makes no difference whether we sit as a Lands Act court or as a federal court exercising its diversity jurisdiction; under either circumstance our position is analogous to that of a Louisiana appellate court. Furthermore, although we are not bound by state appellate court decisions, we will not disregard them "unless [we are] convinced by other persuasive data that the highest court of the state would decide otherwise." 8



It is helpful to reiterate Louisiana's Civilian methodology with respect to interpreting law and legislation. Under Louisiana's Civil Law tradition, courts look first and foremost to statutory law. The Louisiana Civil Code instructs that "[t]he sources of law are legislation and custom," 9 and that "[l]egislation is a solemn expression of legislative will." 10 "[T]he primary basis of law for a civilian is legislation, and not (as in the common law) a great body of tradition in the form of prior decisions of the courts." 11 The concept of stare decisis is foreign to the Civil Law, including Louisiana. 12 Therefore, in cases such as this we are guided by decisions rendered by the Louisiana appellate courts, particularly when numerous decisions are in accord on a given issue--the so-called jurisprudence constant--but we are not strictly bound by them.

We are also guided by the Louisiana legislature's own declarations of how it intends statutes to be interpreted. Words are given...

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