Grand Isle Shipyard, Inc. v. Seacor Marine, LLC

• Decision Date: 08 December 2009
• Docket Number: No. 07-31019.,07-31019.
• Citation: 589 F.3d 778
• Parties: GRAND ISLE SHIPYARD, INC.; Gray Insurance Company, Plaintiffs-Appellees, v. SEACOR MARINE, LLC, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

589 F.3d 778

GRAND ISLE SHIPYARD, INC.; Gray Insurance Company, Plaintiffs-Appellees, v. SEACOR MARINE, LLC, Defendant-Appellant.

No. 07-31019.

United States Court of Appeals, Fifth Circuit.

December 8, 2009.

Robert S. Reich (argued), Reich, Album & Plunkett, L.L.C., Metairie, LA, for Plaintiffs-Appellees.

Gary Alan Hemphill, Trial Atty. (argued), Phelps Dunbar, L.L.P., New Orleans, LA, for Defendant-Appellant.

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

Before JONES, Chief Judge, and KING, JOLLY, DAVIS, WIENER, BARKSDALE, GARZA, BENAVIDES, STEWART, DENNIS, CLEMENT, PRADO, OWEN, ELROD, SOUTHWICK

and HAYNES, Circuit Judges.^*

W. EUGENE DAVIS, Circuit Judge:

I.

The question presented by this appeal is what law governs the resolution of a contractual dispute, here enforceability of an indemnity provision, when the act or omission that causes the underlying death, bodily injury, or property damage (hereafter, the "tort") which triggered the contractual indemnity claim occurred on navigable water on the Outer Continental Shelf ("OCS"), but the contract that creates the indemnity obligation between the parties calls for a majority of the work to be performed on stationary platforms on the OCS. Central to this issue is the application of the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331, et seq. ("OCSLA").

The law is clear that when a tort occurs on navigable water on the OCS, as opposed to, for example, a stationary platform, and a non-seaman is injured, maritime law applies to the ensuing tort action by that worker against third parties. Some of our cases have applied this same rule to a contractual indemnity dispute and looked to the site of the tort to determine the situs of the controversy, the first step in deciding what law applies. Instead of looking to the site of the tort, other cases have applied what amounts to a focus-of-the-contract test which looks to where the contract contemplates that most of the work will be performed: if a majority of the performance called for by the contract is on stationary platforms on the OCS, that is the situs of the controversy for purposes of determining whether the law of the adjacent state applies as surrogate federal law. If a majority of the work called for by the contract is aboard vessels on navigable water on the OCS, this is the situs of the controversy.

We hold that the focus-of-the-contract test is the appropriate test to apply in determining the situs of the controversy in contract cases, and we adopt that rule for the circuit. We therefore agree with the trial judge that because the relevant contract contemplated that a majority of the contractor's work would be performed on stationary platforms on the OCS, this should be deemed the relevant "situs" for the instant indemnity dispute and because none of the other factors lead us to apply any other law, we must apply Louisiana law. When we apply Louisiana law, the Louisiana Oilfield Indemnity Act, LA.REV. STAT. ANN. § 9:2780(A) ("LOIA") renders the indemnity agreement at issue unenforceable, so we affirm the summary judgment in favor of Grand Isle.

II. FACTS

This declaratory judgment action involves an indemnity dispute between Grand Isle and Seacor, two contractors of BP American Production Company ("BP"). Grand Isle's contracting duties involved the repair and maintenance of BP's offshore platforms, while Seacor's duties involved the transporting of workers for BP and its contractors. The indemnity dispute in this case arises from an April 2005 incident in which Denny Neil, a Grand Isle employee, was injured in a fall onboard the M/V SEA HORSE IV, a vessel owned and operated by Seacor. At the time of the accident, the SEA HORSE IV was transporting Neil from his work platform to the residential platform which contained his living quarters. Deposition testimony indicated that the vessel was in close proximity to the residential platform at the time of the accident, but it is undisputed that neither Neil nor the SEA HORSE IV were in physical contact with the platform when the accident occurred.

Neil filed suit against Seacor in the U.S. District Court for the Southern District of Texas, asserting a claim for vessel negligence under § 905(b) of the Longshore and Harbor Worker's Compensation Act ("LHWCA"). Seacor tendered its defense and indemnity to Grand Isle; Seacor also claimed the benefit of insurance provided by Grand Isle's insurer Gray. On March 17, 2006, Grand Isle and Gray filed suit in the U.S. District Court for the Eastern District of Louisiana, seeking a declaratory judgment that: (1) Grand Isle is not contractually obligated to defend and indemnify Seacor; and (2) Seacor is not entitled to insurance coverage from Gray.

Grand Isle and Gray subsequently filed motions for summary judgment in which they argued that by virtue of OCSLA, the LOIA applies as surrogate federal law in this case, thus invalidating the contractual indemnity provision at issue here; and (2) that § 905(b) of the LHWCA is applicable to the case and prohibits enforcement of the indemnity provision. Seacor filed its own cross motion for summary judgment, maintaining that general maritime law governs the dispute and noting that nothing in that law prohibits the indemnity agreement at issue here.

Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 543 F.3d 256, 257-58 (5th Cir. 2008) (hereinafter Grand Isle (Panel)), vacated, 569 F.3d 523 (5th Cir.2009) (en banc). Seacor seeks indemnity under the contract between Grand Isle and BP. Paragraph 14.07 of that contract¹ is virtually identical to the indemnity agreement in a contract between BP and Seacor, "and neither party disputes that BP sought thereby to impose reciprocal indemnity obligations among its contractors." Id. at 258. The undisputed objective was for each contractor whose employee was injured to hold harmless and indemnify BP (and other contractors engaged by BP on the jobsite) for liability resulting from injuries to or death of that employee. The material facts are not in dispute.

The ultimate legal issue before the district court and the panel, and now before the full court, is whether the adjacent state law of Louisiana, including the LOIA, applies to the case. The parties agree that if the LOIA does apply, it invalidates Grand Isle's indemnity obligation to Seacor, but if Louisiana law and the LOIA do not apply, the indemnity agreement is enforceable.

To determine whether OCSLA required application of state law to this dispute the district court applied the three-part test that the Supreme Court formulated in Rodrigue v. Aetna Casualty & Surety Co., 395 U.S. 352, 89 S.Ct. 1835, 23 L.Ed.2d 360 (1969). We have applied that test in a number of cases, including Union Texas Petroleum Corp. v. PLT Engineering, Inc., 895 F.2d 1043, 1047 (5th Cir. 1990) (hereinafter PLT). As we articulated the Rodrigue test in PLT, for state law to apply as surrogate federal law, three conditions must be met: "(1) The controversy must arise on a situs covered by OCSLA (i.e. the subsoil seabed, or artificial structures permanently or temporarily attached thereto). (2) Federal maritime law must not apply of its own force. (3) The state law must not be inconsistent with Federal law." Id.

Here, the district court first considered whether the indemnity controversy arose on an OCSLA situs, i.e., on a stationary platform or other location on the OCS as provided for in OCSLA. In considering this first PLT condition, the district court determined that the OCSLA situs requirement was met because (1) the situs of the contract containing the indemnity agreement at issue depends upon the location where performance of the work is called for by the contract, and (2) the contract between Grand Isle and BP contemplated that most of the work was to be performed on BP platforms, i.e., OCSLA covered situses. Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 2007 WL 2874808, at *3 (E.D.La.2007) (hereinafter Grand Isle (District)).² The court also found that the second and third PLT conditions were met. Id. at *4-5. Accordingly, the district court granted Grand Isle's and Gray's motion for summary judgment and denied Seacor's motion. Id. at *6.

Seacor timely appealed, and the panel reversed. The panel concluded that because Neil's accident occurred on a vessel on navigable water above the OCS and not on a situs expressly covered under the OCSLA, this indemnity dispute did not arise on a covered situs; thus, it was unnecessary to address the second and third prongs of the PLT test. Grand Isle (Panel), 543 F.3d at 259-60. The panel therefore concluded that the LOIA could not apply as surrogate federal law to void the indemnity agreement, and it vacated and remanded on that basis. Id. at 263-64. We granted Grand Isle's petition for rehearing en banc to address this important question of law.

III. JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction pursuant to 28 U.S.C. § 1291. "[W]e review de novo the district court's order granting [Grand Isle's and Gray's] motion for summary judgment under Rule 56 and apply the same standard as did the district court." Cornerstone Christian Schs. v. Univ. Interscholastic League, 563 F.3d 127, 133 (5th Cir.2009).

IV. ANALYSIS

As indicated above, the critical question we must answer is what law applies. The answer to this question depends on the applicability of the OCSLA to the uncontradicted facts. More particularly, in PLT terms, we must identify the "situs" of the controversy.

In deciding this question we begin with the governing statute, OCSLA, which provides in pertinent part:

(2)(A) To the extent that they are applicable and not inconsistent with this subchapter or with other Federal laws and regulations of the Secretary now in effect or hereafter adopted, the civil and criminal laws of each adjacent State, now in effect or hereafter adopted, amended, or repealed are hereby declared to be the law of the United...