Brown v. Forest Oil Corp.

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: DUHE
• Citation: Brown v. Forest Oil Corp., 29 F.3d 966 (5th Cir. 1994)
• Decision Date: 10 August 1994
• Docket Number: Nos. 93-4340,93-5292,s. 93-4340
• Parties: James BROWN and Jan Brown, Plaintiffs-Appellants, v. FOREST OIL CORP., et al., Defendants, Production Operators, Inc., Defendant-Appellee. James Brown, et al., Plaintiffs, James BROWN, Plaintiff-Appellant, v. PRODUCTION OPERATORS, INC., Defendant-Appellee.

Page 966

29 F.3d 966

James BROWN and Jan Brown, Plaintiffs-Appellants, v. FOREST OIL CORP., et al., Defendants, Production Operators, Inc., Defendant-Appellee.

James Brown, et al., Plaintiffs, James BROWN, Plaintiff-Appellant, v. PRODUCTION OPERATORS, INC., Defendant-Appellee.

Nos. 93-4340, 93-5292.

United States Court of Appeals Fifth Circuit.

Aug. 10, 1994.

Steve A. Bryant, Bryant & McLean, Houston, TX, Joseph R. Joy, III, Lafayette, LA, for appellants in both cases.

Louis R. Davis, Dawn M. Fuqua, Mangham & Hardy, Lafayette, LA, Andrew H. Petty, Alsup & Bevis, Houston, TX, Jennifer E. Beyer, Preis & Kraft, Lafayette, LA, for appellee in No. 93-5292.

Louis R. Davis, Dawn Mayeux Fuqua, Mangham & Hardy, Lafayette, LA, for appellee in No. 93-4340.

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

Before ALDISERT ¹, REYNALDO G. GARZA and DUHE, Circuit Judges.

DUHE, Circuit Judge:

James Brown, an employee of Production Operators, Inc. ("POI"), was injured while working on an offshore platform located on the outer continental shelf off the coast of Louisiana. To recover for their injuries, James Brown and his wife sued numerous defendants, including Forest Oil Corp., an owner and operator of the platform. POI intervened to recover medical and wage benefits that it had paid to or on behalf of James Brown since his injury.

Upon learning POI had failed to secure compensation under the Longshoreman and Harbor Worker's Compensation Act ("LHWCA"), the Browns sued POI for damages under 33 U.S.C. Sec. 905(a). [Hereinafter "the LHWCA case"]. POI asserted a counterclaim against the Browns arising out of James Brown's execution when employed of a contract called the Insurance Waiver Agreement ("the Agreement"). The Agreement, if Brown suffered a compensable injury, provided that POI would pay Brown 100 percent of his salary and reasonable medical benefits in lieu of the compensation benefits applicable in the jurisdiction where he was injured. In exchange for these promises, Brown waived any claims that he may have against POI arising out of his injury.

Before trial, the Browns settled with all defendants except POI for $600,000. Later, the Browns' LHWCA case against POI was tried to a jury, which found both POI and Forest Oil responsible for the Browns' injuries. The district court deducted from the total damages found by the jury the full amount that the Browns had collected from the settlement and the benefits that James Brown had previously received from POI. After the application of these credits, the district court entered a judgment against the Browns for the balance they owed POI for the benefits it had previously paid. ²

While the federal suit was pending, James Brown filed suit seeking money damages against POI in Texas state court, alleging that POI had breached the Insurance Waiver Agreement by terminating payment of benefits to Brown after he commenced the LHWCA action against POI in federal court. [Hereinafter "breach of contract case"]. Alternatively, Brown argued that POI fraudulently induced him into signing the Agreement. The breach of contract case was removed to federal court and transferred to the Western District of Louisiana. POI's counterclaim in the LHWCA case was severed and consolidated with the breach of contract case.

POI moved to dismiss, or alternatively, for summary judgment. The district court granted POI's motion for summary judgment and dismissed all Brown's claims in the breach of contract case with prejudice.

The Browns appeal several aspects of the damage award in the LHWCA case and the grant of summary judgment in favor of POI in the breach of contract case. The appeals have been consolidated before this Court. We vacate and remand in part and affirm in part.

DISCUSSION

I. Breach of Contract Case

A. Standard of Review

We review a summary judgment de novo. Abbott v. Equity Group, Inc., 2 F.3d 613, 618 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1219, 127 L.Ed.2d 565 (1994). Summary judgment may be granted if there is "no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A summary judgment may be affirmed on any proper legal basis, even if not ruled on by the district court. See Harbor Ins. Co. v. Urban Constr. Co., 990 F.2d 195, 199 (5th Cir.1993).

B. Breach of Contract Claim

In this Court the parties proceed assuming that, under the Insurance Waiver Agreement, Brown waived his right to compensation under the LHWCA in lieu of the benefits promised under the contract. ³ Section 915(b) of the LHWCA provides, however, that "[n]o agreement by an employee to waive his right to compensation under this chapter shall be valid." Thus, as a matter of law, Brown's breach of contract claim must fail because the contract is void. See Lawson v. Standard Dredging Co., 134 F.2d 771 (5th Cir.1943) (finding employment contract that waived benefits under the LHWCA in favor of state worker's compensation benefits invalid).

Contrary to Brown's assertion, we find no policy considerations that preclude this result. Brown makes much of POI's failure to secure compensation. What Brown fails to understand is that whether the contract is valid or applies to the LHWCA is a separate inquiry from whether POI failed to secure compensation. The LHWCA provides mechanisms to "punish" those employers who fail to secure compensation. See 33 U.S.C. Secs. 905(a), 938(a). The requirements for securing compensation are set forth in Sec. 932 of the LHWCA, and Sec. 932 does not require a contract between the employee and employer. That POI failed to secure compensation is irrelevant to the inquiry of whether the contract is valid.

C. Fraud and Misrepresentation Claim

Alternatively, Brown argues that POI through certain representations induced him into entering an agreement that was void. To prevail on his fraud claim, Brown must prove POI's intent to defraud him or gain an unfair advantage, and a resulting loss, or damages. Autin v. Autin, 617 So.2d 229 (La.Ct.App. 5th Cir.), writ denied, 620 So.2d 846 (1993). To recover for negligent misrepresentation, Brown must establish the following elements: 1) a legal duty on the part of POI to supply correct information to Brown, 2) a breach of that duty, and 3) damages to Brown as a result of his justifiable reliance upon the misrepresentation. Busby v. Parish Nat'l Bank, 464 So.2d 374, 377 (La.Ct.App. 1st Cir.), writ denied, 467 So.2d 1132 (1985).

First, the undisputed facts show that at the time Brown signed the Agreement, POI was not aware that Brown would be working in a federal jurisdiction for workers' compensation purposes. Therefore POI could not have known, at the time it entered into the Agreement, that it would be invalid under the LHWCA. Brown has adduced no summary judgment evidence that demonstrates otherwise. ⁴

The only other misrepresentation suggested by the summary judgment evidence is that POI fraudulently induced Brown into signing the Insurance Waiver Agreement by representing that it was a qualified self-insurer under the LHWCA. Brown contends that his damages are the difference between the remedies afforded by the Agreement and those of the LHWCA. Assuming that POI misrepresented its self-insurer status, ⁵ as previously discussed, POI's self-insurer status is irrelevant to the contract's validity. Brown has failed to show how such a misrepresentation caused him any damages.

Because we find that Brown has failed to establish a genuine issue of material fact as to his fraud and misrepresentation claim, we need not address the prescription argument urged by POI.

II. The LHWCA Case

A. Credit for Settlement

The Browns argue that the district court erred in setting off the entire $600,000 they received in settlement against the total damages awarded to them at trial. ⁶ They argue that Louisiana law, made applicable by the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. Secs. 1331-1356, is the applicable law. Accordingly, the Browns contend that the district court should have employed the proportionate fault method in offsetting the third-party settlement. See Diggs v. Hood, 772 F.2d 190, 195-96 (5th Cir.1985) (explaining that under Louisiana law, nonsettling tortfeasor is responsible for only his share of the judgment based on his percentage of fault). POI responds that under the OCSLA, Louisiana law only applies if there is no inconsistent federal law, and because the LHWCA embodies a one recovery policy, the dollar-for-dollar or pro tanto approach to credit was appropriate.

A brief review of the statutory framework governing this action is necessary to understand the issue confronting this Court.

Because Brown was injured on a platform on the outer continental shelf, the OCSLA applies to this lawsuit. 43 U.S.C. Sec. 1333(a). Pursuant to Sec. 1333(b) of the OCSLA, compensation is payable under the provisions of the LHWCA for employees injured as a result of operations conducted on the outer continental shelf for the purpose of exploring for or removing natural resources from the seabed. Because POI was engaged in this type of operation, the LHWCA is the applicable compensation scheme in this case.

Under the LHWCA, an injured worker is ordinarily barred from bringing a civil action against his or her employer. See 33 U.S.C. Sec. 905(a). When an employer fails to secure compensation in accordance with Sec. 932 of the LHWCA, ⁷ however, Sec. 905(a) provides that an employee or his legal representatives "may elect to claim compensation under the chapter, or to maintain an action at law or in admiralty for damages on account of such injury or death." Because POI failed to secure compensation, the Browns elected to bring a civil action under Sec. 905(a).

The Browns brought their civil cause of action under the OCSLA. Section 1333(a)(2)(A) of the OCSLA states that:

To the extent that they are applicable and not...