O'DELL v. North River Ins. Co., Civ. A. No. 84-0864.

• Citation: 614 F. Supp. 1556
• Decision Date: 13 August 1985
• Docket Number: Civ. A. No. 84-0864.
• Court: U.S. District Court — Western District of Louisiana
• Parties: Arnold J. O'DELL and Janice O'Dell v. NORTH RIVER INSURANCE COMPANY, et al.

614 F. Supp. 1556

Arnold J. O'DELL and Janice O'Dell v. NORTH RIVER INSURANCE COMPANY, et al.

Civ. A. No. 84-0864.

United States District Court, W.D. Louisiana, Lake Charles Division.

August 13, 1985.

Richard C. Broussard, Lafayette, La., for plaintiffs.

St. Paul Bourgeois, IV, Lafayette, La., William G. Tabb, III, New Orleans, La., Craig W. Marks, Lafayette, La., and Michael P. Mentz, Metairie, La., for defendants.

RULING

EDWIN F. HUNTER, Jr., Senior District Judge.

This matter comes before the Court on cross-motions for summary judgment on a cross-claim and third-party demand for contractual indemnity. Plaintiff Arnold O'Dell alleges that he was injured while employed by Food and Services, Inc. as a galley hand aboard a jack-up rig, the "LaSalle," which was allegedly owned by the Cliffs Drilling Division of Cleveland Cliffs Iron Ore Company at the time of the accident. O'Dell and his spouse have brought suit against Food and Services, Inc. under the Jones Act and against the Cliff Drilling Division of Cleveland Cliffs Iron Ore Company and its insurers collectively, "Cliffs" under general maritime negligence principles and the unseaworthiness doctrine. Cliffs has in turn filed a cross-claim against Food and Services, Inc. and a third-party demand against Penn-America Insurance Company collectively, "F & S" seeking contractual indemnity and recognition as an additional insured pursuant to a master service agreement between Cliffs and F & S. In their cross-motions, Cliffs seeks summary judgment in its favor enforcing the cross-claim and third party demand and F&S seeks summary judgment dismissing these claims.

Under the master service agreement, F & S agreed to provide catering services to Cliffs pursuant to work orders to be performed on land drilling rigs, drilling barges, jack-up drilling rigs, vessels, platforms or their drilling installations. F & S does not dispute that an agreement to provide catering services for a vessel, such as the "LaSalle," is a maritime contract. Cf. The Reina Victoria, 298 F. 765 (S.D.N.Y. 1924) (Learned Hand, J.) (a supplier of food and water to a vessel is entitled to assert a maritime lien for his services because of their maritime nature). F & S also does not dispute that maritime law would apply to a typical contract action arising out of the performance of these maritime services pursuant to the master service agreement. That is, F & S does not quarrel with the general principle recognized in cases such as Hale v. Co-Mar Offshore Corp., 588 F.Supp. 1212 (W.D.La.1984), to the effect that maritime law will apply to the separable maritime elements of a "mixed contract" wherein nonmaritime obligations are also assumed. See Hale, 588 F.Supp. at 1215. F & S does urge, however, contrary to Judge Shaw's holding in Hale, that the indemnity obligation assumed in the master service agreement cannot properly be considered as subsidiary to the maritime elements in the contract and that the obligation is therefore governed by Louisiana state law without regard to whether the indemnity obligation arises out of the performance of the maritime elements of the agreement. F & S concludes this facet of its argument with the contention that the indemnity provision involved here would be void and unenforceable under the Louisiana Oilfield Anti-Indemnity Act, La.R.S. 9:2780.

Substantial Fifth Circuit authority supports the position adopted by F & S. The opinions in Hicks v. Ocean Drilling and Exploration Co., 512 F.2d 817 (5th Cir. 1975), cert. denied, 423 U.S. 1050, 96 S.Ct. 777 (1976); Dickerson v. Continental Oil Company, 449 F.2d 1209 (5th Cir.1971), cert. denied, 405 U.S. 934, 92 S.Ct. 942, 30 L.Ed.2d 809 (1972); and Grigsby v. Coastal Marine Service of Texas, Inc., 412 F.2d 1011 (5th Cir.1969), seem to espouse the view that an indemnity obligation in a maritime contract is governed by adjacent state, rather than maritime, law. See Hicks, 512 F.2d at 826; Dickerson 449 F.2d at 1221; Grigsby, 412 F.2d at 1039. Yet other, no less substantial, Fifth Circuit authority supports the contrary position, that an indemnity clause in a maritime contract is controlled by federal maritime, rather than state, law. See Lirette v. Popich Bros. Water Transport, Inc., 699 F.2d 725, 728 n. 11 (5th Cir.1983); Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 332 (5th Cir.1981); Transcontinental Gas Pipe Line Corp. v. Mobile Drilling Barge, 424 F.2d 684, 691 (5th Cir.1970). Indeed, one panel has applied this latter rule as "settled precedent." Corbitt, 654 F.2d at 332.

This district court therefore finds itself in the unenviable position of having to choose between two clearly conflicting lines of Fifth Circuit authority on the same point of law. Fortunately, established principles exist for resolving just this sort of dilemma. It is settled law in this circuit that the inconsistency between two conflicting lines of Fifth Circuit authority must be resolved in favor of the earlier line of cases. E.g., United States v. Gray, 751 F.2d 733, 735 (5th Cir.1985). This doctrine has evolved as a logical extension of the rule that one panel within the circuit may not overrule the opinion of another. See Alcorn County, Mississippi v. U.S. Interstate Supplies, Inc., 731 F.2d 1160, 1166 (5th Cir.1984). Yet this well-established rule of precedence of course prohibits departure only from prior circuit holdings. See, e.g., Placid Oil Co. v. Federal Energy Regulatory Comm'n, 666 F.2d 976, 984 (5th Cir.1982). As always, dicta by one panel stands as persuasive authority only, although it is entitled to great weight absent a contrary holding in the circuit.

With very due respect to the Hicks, Dickerson and Grigsby courts, this Court is bound under these principles to follow the "settled precedent" of Lirette, Corbitt, and Transcontinental Gas. The expressions in Dickerson and Grigsby as to what law should be applied to the indemnity obligations in a maritime contract can be fairly considered only as dicta because neither case involved a maritime contract. The indemnity obligations in Dickerson arose out of the performance of a nonmaritime drilling contract on a fixed platform. See 449 F.2d at 1212, 1221. Similarly, the issues in Grigsby centered around a nonmaritime equipment rental agreement. See 412 F.2d at 1038. Hicks does in fact apply state law to an indemnity obligation in a maritime master service contract pertaining to a Jones Act vessel, a submersible oil storage facility. See 512 F.2d at 826. Yet, by the time of the Hicks decision, the Fifth Circuit had already held in Transcontinental Gas that maritime law governs an indemnity clause in a maritime contract. See 424 F.2d at 691. Under the principles set forth before, this Court is bound to follow the earlier holding of Transcontinental Gas and must similarly hold that the indemnity provisions pertaining to the maritime contract in this case are controlled by federal maritime, not state, law.

Moreover, the Court respectfully suggests that the Transcontinental Gas line of cases has generated the better-reasoned rule. The Court can see no reason why maritime law should not govern the indemnity obligations arising out of the performance of a maritime obligation. Logically, the same law should apply to all of the maritime incidents of a maritime contract. F & S nonetheless urges that the Court should apply the "maritime but local" exception to this general rule, relying in principal part on Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955), and dicta in Grigsby. Yet the decision in Wilburn Boat Company was founded in large part on the tradition of federal deference to extensive state regulation over the insurance industry. See Wilburn Boat Company, 348 U.S. at 313-21; 75 S.Ct. at 370-74. Contractual indemnity, on the other hand, is not a matter that has been the subject of complex and extensive state regulation. State legislatures have entered the field on only a piecemeal basis in order to alter settled jurisprudential rules. Cf. La.R.S. 9:2780 (prohibition of agreements to indemnify an indemnitee against his own negligence in an oilfield contract); Tex.Civ.Stat. Ann. art. 2212b (same). And, unlike marine insurance, the underlying principles of maritime contractual indemnity are well-established in the jurisprudence. See generally Note, Contractual Indemnity under Maritime and Louisiana Law, 43 La.L. Rev. 189, 199-208 (1982). Thus, as the states do not have an extensive regulatory interest in maritime contracts of indemnity and as the maritime law is well-developed in this area, no solid basis exists for application of the "maritime but local" doctrine here.

To complete the choice-of-law inquiry in this mixed contract case, the Court need further determine only whether the injured party was employed in providing the maritime service contemplated by the contract. See Hale, 588 F.Supp. at 1217; Home Ins. Co. v. Garber Industries, Inc., 588 F.Supp. 1218, 1220-21 (W.D.La.1984). On the present motion, neither party disputes that O'Dell was employed as a galley hand aboard the jack-up LaSalle pursuant to the master service agreement between the parties. On the uncontroverted facts, the alleged injury occurred while O'Dell...