Corbitt v. Diamond M. Drilling Co.

• Decision Date: 24 August 1981
• Docket Number: No. 80-3092,80-3092
• Citation: 654 F.2d 329
• Parties: Harvey CORBITT, Plaintiff, v. DIAMOND M. DRILLING CO., Defendant. SHELL OIL COMPANY, Third-Party Plaintiff-Appellant, v. SLADCO, INC., Third-Party Defendant-Appellee. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 329

654 F.2d 329

Harvey CORBITT, Plaintiff, v. DIAMOND M. DRILLING CO., Defendant.

SHELL OIL COMPANY, Third-Party Plaintiff-Appellant, v. SLADCO, INC., Third-Party Defendant-Appellee.

No. 80-3092.

United States Court of Appeals, Fifth Circuit.

Unit A

Aug. 24, 1981.

James E. Blazek, Thomas G. O'Brien, New Orleans, La., for plaintiff.

McGlinchey, Stafford, Mintz & Hoffman, Peter L. Hilbert, Jr., John E. Galloway, New Orleans, La., for defendant.

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

Before CHARLES CLARK and GEE, Circuit Judges, and SPEARS, ^* District Judge.

CHARLES CLARK, Circuit Judge:

The issue presented on this appeal is whether Shell Oil Company is entitled to receive indemnification under the terms of its contract with Sladco, Inc. The district court held that it was not and granted summary judgment to Sladco. We agree and affirm the district court.

I.

Shell Oil Company (Shell) owned certain oil and gas leases covering water bottoms located in the Gulf of Mexico. On January 25, 1977, it entered into an "Offshore Drilling Workover Contract" with Diamond M. Drilling Company (Diamond M.) under which Diamond M. agreed to furnish labor, materials, and equipment for drilling, completing, working over, or deepening wells on Shell's leaseholds. In addition to the various provisions governing the terms and conditions of performance, the Offshore Drilling Workover Contract contained an indemnity clause. Under Article X of the contract, Shell agreed to indemnify Diamond M. against all claims brought by Shell's employees, agents, invitees, or subcontractors for personal injuries arising out of work performed by them. Diamond M. also assumed a similar, reciprocal liability under Article X to indemnify Shell for claims brought by its own employees, agent, or invitees.

Shell also hired Sladco, Inc. (Sladco) as an independent contractor. On November 21, 1975, Sladco executed a blanket "Purchase Order" under which Sladco agreed to furnish personnel, equipment, and supplies for casing services as required by Shell. This Purchase Order incorporates the indemnification provision which is in dispute here. In pertinent part, it reads as follows:

... Contractor (Sladco) shall indemnify Shell against all loss or damage arising out of the negligence, of Contractor or any sub-contractor and not within the Contractor's indemnity in the next sentence. Contractor shall indemnify and defend Shell Oil Company and its employees and agents against all claims, suits, liabilities and expenses on account of injury or death of persons (including employees of Shell or Contractor, and sub-contractor and their employees) or damage of property arising out of or in connection with performance of this Order, and not caused solely by Shell's negligence without any contributory negligence or fault of Contractor or any sub-contractors.

This litigation stems from the injury of a Sladco employee who was working on one of Diamond M.'s drilling rigs. On April 13, 1977, Shell requested Sladco to send a casing crew to the DIAMOND M. RIG NO. 42 which was performing drilling services for Shell. The DIAMOND M. RIG NO. 42 is a submersible inland drilling barge, and on April 13 it was located at State Lease 1665, Eugene Island Block 18, Well Number 26, off the Louisiana coast. The Sladco crew comprised the plaintiff in this case, Harvey Corbitt, and five other employees. Corbitt allegedly sustained injuries to his spine when he slipped and fell on a mud stand while he was tightening a unibolt connection that secured the cement head and kelly hose on top of the oil well.

Corbitt then sued Diamond M. for negligence, claiming that Diamond M owned the nut and nonadjustable wrench he was using when he was injured. Corbitt contended that his fall was caused by the wrench slipping on the unibolt because the nut had become rounded off. Other witnesses confirmed his explanation for the accident, but others suggested that Corbitt could have merely lost his footing on the mud stand because it was covered with mud and very slippery.

Diamond M. filed a third-party action against Shell seeking indemnity under the terms of the Offshore Drilling Workover Contract. Shell then brought its own third-party action against Sladco, asserting a right of indemnification under the terms of the Purchase Order. Diamond M. and Shell subsequently settled with Corbitt, and Sladco moved for summary judgment on Shell's third-party claim. The district court granted Sladco's motion and dismissed the action, concluding that "the language of the indemnity agreement does not require Sladco to indemnify Shell for Shell's contractual liability to Diamond M." Shell appeals from the grant of summary judgment.

II.

Rule 56 of the Federal Rules of Civil Procedure authorizes summary judgment if "there is no genuine issue as to any material fact" and "the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). On appeal Shell maintains that the district court improperly granted summary judgment to Sladco by implicitly resolving three disputed issues of fact: (1) whether federal maritime or Louisiana law controls, (2) whether Shell and Sladco intended the Purchase Order to give Shell a right of indemnification for its contractual liability to Diamond M., and (3) whether Corbitt's injury arose from Sladco's negligence. According to Shell, these were dispositive issues of fact which required the presentation of evidence at trial. Shell's position is without foundation, however, for the district court resolved each of these questions as a matter of law without relying upon any disputed issues of material fact.

Shell first contends that the district court should not have applied federal maritime law to construe the indemnity clause in the Shell-Sladco Purchase Order because a substantial issue of fact existed over whether Corbitt's primary duties as a casing hand on an offshore drilling rig located on inland waters bears a significant relationship to traditional maritime activities. Shell also suggests that Louisiana law should apply because DIAMOND M. RIG NO. 42 was an inland drilling barge located in Louisiana territorial waters. Shell's analysis borrows extensively from the familiar "status" and "situs" concepts for determining coverage by the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901 et seq.

But Shell's approach to the federal-state choice-of-law problem is erroneous in light of settled precedent. The interpretation of an indemnity clause in a maritime contract is ordinarily governed by federal maritime law rather than by state law. Navieros Oceanikos, S.A. v. S.T. Mobil Trader, 554 F.2d 43, 47 (2d Cir. 1977); Capozziello v. Brasileiro, 443 F.2d 1155, 1157 (2d Cir. 1971); Transcontinental Gas Pipe Line Corp. v. Mobile Drilling Barge, 424 F.2d 684, 691 (5th Cir. 1970). See M.O.N.T. Boat Rental v. Union Oil Co., 613 F.2d 576, 579 n. 6 (5th Cir. 1980); Halliburton v. Norton Drilling Co., 302 F.2d 431, 437 (5th Cir. 1962). Moreover, Transcontinental Gas Pipe Line, supra, and Halliburton, supra, established beyond cavil that the Shell-Sladco Purchase Order is a maritime contract to which federal law is applicable. ¹ Accord Tri-State Oil Tool Indus. v. Delta Marine Drilling Co., 410 F.2d 178, 186 (5th Cir. 1969) (federal maritime law of tort indemnity controls where accident occurs in navigable waters).

Shell next argues that the district court should not have granted summary judgment without considering extrinsic evidence of the parties' intentions when the Purchase Order was executed. However, the choice of federal maritime law over...