C.F. Dahlberg & Co., Inc. v. Chevron U.S.A., Inc.

• Decision Date: 03 February 1988
• Docket Number: No. 87-4176,87-4176
• Citation: 836 F.2d 915
• Parties: C.F. DAHLBERG & CO., INC., d/b/a St. Mary Galvanizing Corp., Plaintiff- Appellee, v. CHEVRON U.S.A., INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 915

836 F.2d 915

C.F. DAHLBERG & CO., INC., d/b/a St. Mary Galvanizing Corp., Plaintiff- Appellee, v. CHEVRON U.S.A., INC., Defendant-Appellant.

No. 87-4176.

United States Court of Appeals,

Fifth Circuit.

Feb. 3, 1988.

David M. Culpepper, George R. Irvine, III, Milling, Benson, Woodward, Hillyer, Pierson & Miller, New Orleans, La., for defendant-appellant.

Dirk van Ausdall, Lemle, Kelleher, Kohlmeyer, Dennery, Hunley, Moss & Frilot, New Orleans, La., Onebane, Donohoe, Bernard, Torian, Diaz, McNamara & Abell, Lafayette, La., for plaintiff-appellee.

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

Before REAVLEY, WILLIAMS and HIGGINBOTHAM, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Appellant challenges the district court's granting summary judgment in favor of C.F. Dahlberg & Co., d.b.a. St. Mary, holding that St. Mary had established valid liens for furnishing services or supplies to contractors for work on certain off-shore oil well leasehold platforms owned by Chevron.

I. Facts

Appellee St. Mary galvanized numerous metal objects for two contractors, Watts Corp. and Tammco Unlimited, which were assembling materials to be incorporated into certain offshore oil drilling platforms owned by Chevron. Chevron paid Watts and Tammco for the delivered materials, but Watts and Tammco failed to pay St. Mary. St. Mary then sought recovery as provided under Louisiana law by filing liens against certain Chevron properties where, it claimed, the materials had been incorporated.

The galvanizing for Watts involved 200 pieces of pre-cut grating processed at its plant in Morgan City, Louisiana. Watts had previously shipped the grating to St. Mary to be galvanized. After galvanizing, the grating was then shipped back to Watts on St. Mary's trucks. Watts then incorporated these pieces of grating into an offshore drilling deck which it was constructing for Chevron. The deck was destined for a platform on Block 41CA, South Marsch Island. Watts failed to pay St. Mary the $6,508.88 Chevron had paid to it for the galvanizing work.

The galvanizing for Tammco involved various stair handrails, stair treads, angles, and rope eyes. Tammco transported the items to St. Mary to be galvanized, and trucks from Tammco later picked up the galvanized items from St. Mary's plant. St. Mary alleges that these galvanized items were ultimately used in connection with Tammco's work on two offshore drilling decks for Chevron destined for Block 287-A, Vermillion and Block 332-A, West Cameron. Tammco failed to pay St. Mary the $9,047.19 charge for galvanizing these items although Tammco had been paid by Chevron for them.

St. Mary filed affidavits of liens in the parishes adjacent to the offshore leased tracts upon which the drilling platforms were located against the three offshore leases as provided under the Louisiana Oil, Gas and Water Well Lien Act. La.Rev.Stat.Ann. Sec. 9:4861 et seq. St. Mary then sued Chevron to enforce these liens on July 18, 1986. On July 29, 1986 the district court ordered the U.S. Marshal to sequester the liened properties. St. Mary filed a motion for summary judgment on September 29, 1986, which was denied on November 25, 1986. ¹ St. Mary filed a second motion for summary judgment on January 26, 1987, claiming it was entitled to judicial recognition of its lien claims as a matter of law. ²

St. Mary supported its second summary judgment motion with the affidavits of three of its employees--Brown, a St. Mary truck driver; Romero, a St. Mary shipping and receiving clerk; and Taylor, Vice President of Administration for St. Mary. Brown's affidavit established that 200 pieces of galvanized grating had been delivered to Watts under an invoice specifying the Chevron South Marsch Island Block 41CA project. Romero's affidavit established that various items of steel were galvanized and loaded into Tammco trucks on two occasions. Invoices for these items showed them destined for Chevron projects on West Cameron Block 332-A, Vermillion Block 287-A, and West Cameron Block 560-A. Taylor's affidavit verified the invoices which were issued in connection with the galvanizing services. Watts was billed $6,508.88 for Chevron South Marsch Island Block 41CA work; Tammco was billed $377.26 for the West Cameron Block 332-A work, and $8,669.93 for the Vermillion Block 287-A and West Cameron Block 560-A work. However, of the $8,669.93 billed to Tammco, only $3,689.19 was designated explicitly for the Vermillion Block 287-A project. The invoice for the remaining $4,980.74 references both West Cameron 560-A and Vermillion Block 287-A, but does not indicate what items or amounts were allocated to each project.

The district court granted St. Mary's second motion for summary judgment on February 23, 1987, on the ground that St. Mary was a "supplier" under Sec. 9:4861(B) of the Louisiana Act. The court's judgment, entered on March 12, 1987, found that St. Mary had a valid lien against three Chevron leases (South Marsch Island Block 41CA, Vermillion Block 287-A, and West Cameron Block 332-A). The judgment did not deal with West Cameron Block 560-A which had not been mentioned in St. Mary's pleadings although it had been referred to in the invoices. The total judgment was in the amount of $15,556.07 plus interest from the date of judicial demand, the costs of preparing and recording the privileges recognized, 10% attorney's fees, and all costs of the proceedings. The judgment did not allocate the amounts due among the three leases in question. Chevron has filed a timely appeal.

II. Issues on Appeal

A. Does St. Mary have valid liens under the Louisiana Oil, Gas and Water Well Lien Act?

The Louisiana Oil, Gas and Water Well Lien Act grants a lien privilege to:

A. Any person who performs any labor or service in drilling or in connection with the drilling of any well or wells in search of oil, gas or water, or who performs any labor or service in the operation or in connection with the operation of any oil, gas or water well....

B. Any person who ... furnishes any ... equipment, material or supplies for or in connection with the drilling of any well or wells in search of oil, gas or water ... whether or not such materials, machinery, equipment, services and supplies are incorporated in or become a part of the completed oil, gas or water well....

La.Rev.Stat.Ann. Sec. 9:4861 (1984). (Emphasis added).

St. Mary claims that it can recover under either subsection A or B of Sec. 9:4861. St. Mary first claims that it performed a labor or service in connection with the drilling of oil wells under Sec. 9:4861(A) by providing galvanizing services to Chevron via contractors Watts and Tammco. St. Mary falls within the literal terms of the statute, and the case law supports that interpretation. St. Mary galvanized pieces of steel that were at all times designated to be incorporated by Chevron's contractors into drilling platforms to be located on Chevron's leases. St. Mary clearly provided a service in connection with the drilling of oil wells: it galvanized steel pieces that were incorporated into drilling platforms.

The fact that the work was not actually done on the drilling site is not determinative, especially in light of the fact that these were offshore leases. Galvanizing is not the kind of service readily performed at sea. In P.H.A.C. Services, Inc. v. Seaways International, Inc., 403 So.2d 1199 (La.1981), the Louisiana Supreme Court said in dictum: "It is clear from the statute that in some cases a lien might secure a claim for work performed away from the well or leases." Id. at 1202. We have accepted the Louisiana Supreme Court's dictum as the current Louisiana law. St. Mary Iron Works, Inc. v. McMoran Exploration Co., 809 F.2d 1130, 1134-35 (5th Cir.1987).

Appellant attempts to rebut this claim on the authority of a 50 year-old case holding that an oil well lien was not available where the activities of the party seeking it were too remote from the oil and gas venture. Gleason v. Twin Cities Drilling Company, 183 So. 67, 68 (La.Ct.App.1938) (scouting other oil wells in vicinity not within the Act). ³ Under more recent Louisiana case law, however, St. Mary's performance cannot be considered too "remote" despite the physical distance from its factory to the platforms' eventual locations in the Gulf of Mexico and the intermediary presence of contractors between St. Mary and Chevron. See Texas Pipe and Supply Co. v. Coon Ridge Pipeline Co., 506 So.2d 1296 (La.Ct.App.1987) ("furnisher of a furnisher" of material and supplies was allowed to recover under Sec. 9:4861); Oilwell Supply Co. v. Independent Oil Co., 219 La. 936, 54 So.2d 330, 332-33 (1951).

Other entities who have been held proper claimants under Sec. 9:4861 include: The owner of a crewboat which provided transportation to workers on a pipeline construction project, Continental Casualty Co. v. Associated Pipe & Supply Co., 447 F.2d 1041, 1054-56 (5th Cir.1971); a caterer who furnished food, lodging, and housekeeping services on pipeline construction, id.; and a claimant who supplied divers to work on an offshore oil pipeline project, Continental Casualty Co. v. Associated Pipe & Supply Co., 310 F.Supp. 1207, 1226 (E.D.La.1969). The coverage of Sec. 9:4861 is clearly broad and comprehensive. Chevron's arguments that Sec. 9:4861 should be narrowly construed to defeat St. Mary's claims are not persuasive.

St. Mary also claims coverage under Sec. 9:4861(B), on the ground that in galvanizing the steel pieces it had furnished material or supplies in connection with the drilling or operation of wells. The pieces of steel were fabricated or supplied by the contractor and then delivered to St. Mary for galvanizing. We agree with the district court that the application of a protective coating of zinc to these pieces of steel constitutes furnishing "material" or "supplies" under Sec. 9:4861(B). ⁴ Hence, our conclusion is that St. Mary properly...