Hanks v. Transcontinental Gas Pipe Line Corp.

• Decision Date: 20 February 1992
• Docket Number: No. 90-3923,90-3923
• Parties: Johnny HANKS, Plaintiff, The Home Insurance Company and Sheehan Pipeline Construction Company, Intervenors-Appellants, v. TRANSCONTINENTAL GAS PIPE LINE CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 996

953 F.2d 996

Johnny HANKS, Plaintiff The Home Insurance Company and Sheehan Pipeline Construction Company, Intervenors-Appellants, v. TRANSCONTINENTAL GAS PIPE LINE CORPORATION, Defendant-Appellee.

No. 90-3923.

United States Court of Appeals Fifth Circuit.

Feb. 20, 1992.

J. Gregg Collins, Metairie, La., for intervenors-appellants.

Vance A. Gibbs, Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, Baton Rouge, La., for defendant-appellee.

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

Before Reynaldo G. GARZA, WIENER, and BARKSDALE, Circuit Judges.

WIENER, Circuit Judge:

In this Louisiana diversity suit, Intervenors-Appellants, Sheehan Pipeline Construction Company (Sheehan) and The Home Insurance Company (Home), appeal from a grant of summary judgment in favor of Defendant-Appellee, Transcontinental Gas Pipe Line Corporation (Transco). Because we find that the waiver of subrogation provisions in the contract between Sheehan and Transco and in the insurance policy issued by Home are not prohibited

by the Louisiana Oilfield Anti-Indemnity Act ¹, we affirm.

I. FACTS

Sheehan and Transco entered into a contract (the Sheehan/Transco contract) for Sheehan to construct a portion of an overland natural gas interstate transmission pipeline for Transco. ² The contract contained a provision requiring Sheehan to obtain worker's compensation insurance and a waiver of subrogation in favor of Transco. Home issued a worker's compensation policy to Transco containing the contractually required waiver of subrogation provision. During the construction, Plaintiff Johnny Hanks was injured, and Home paid him compensation benefits.

Hanks filed suit in the state district court against Transco seeking damages for the injuries he suffered while working for Sheehan on a segment of Transco's pipeline in Point Coupee Parish, Louisiana. Transco removed the case to federal district court based on diversity of citizenship and jurisdictional amount.

Sheehan and Home filed a motion to intervene in the federal district court action. Transco answered the motion to intervene and filed a motion for summary judgment as to Sheehan based on the waiver of subrogation provision in the Sheehan/Transco contract, and as to Home based on the policy of workers compensation insurance it had issued to Sheehan. Transco argued that the waiver of subrogation was enforceable and was not prohibited by the Act. Citing its own decision in Transco (Lloyds), the district court granted Transco's motion for summary judgment because "[t]here is no dispute that the pipeline in question was a natural gas transmission pipeline not related to exploration or production." Sheehan and Home Insurance timely appealed.

II. STANDARD OF REVIEW

This court reviews the grant of summary judgment motion de novo, using the same criteria used by the district court in the first instance. ³ We "review the evidence and inferences to be drawn therefrom in the light most favorable to the nonmoving party." ⁴ Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." ⁵ When a proper motion for summary judgment is made, a nonmoving party who wishes to avoid judgment by establishing a factual dispute must set forth specific facts showing that there is a genuine issue for trial. ⁶ The conclusory allegation of the nonmovant that a factual dispute exists between the parties will not defeat a movant's otherwise properly supported motion for summary judgment. A dispute about a material fact is genuine only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." ⁷ "Material facts" are "facts that might affect the outcome of the suit under the governing law." ⁸

III. ANALYSIS

The result in this case turns on the parsing of the Act undertaken by this court today in rendering our opinion in Transco (Lloyds). We will not repeat either our lengthy discussion of Civilian methodology of statutory interpretation or our resulting analysis of the Act. In summary, we concluded that

[d]etermining the applicability of the Act is a two-step process. First, there must be an agreement that "pertains to" an oil, gas or water well. If the contract does not pertain to a well, the inquiry ends. Only if we determine that the contract has the required nexus to a well may we proceed to the second step of the process, examination of the contract's involvement with "operations related to the exploration, development, production, or transportation of oil, gas, or water." Although the statute defines an "agreement" pertaining to a well as one concerning "operations related to the exploration, development, production, or transportation of oil, gas, or water," the only sensible interpretation of the statute, when read as a whole, requires that those operations themselves must, first and foremost, pertain to a well. Therefore, if (but only if) the agreement (1) pertains to a well and (2) is related to exploration, development, production, or transportation of oil, gas, or water, will the Act invalidate any indemnity provision contained in or collateral to that agreement. ⁹

In Transco (Lloyds), we recognized that a determination of whether an agreement affecting a gas transportation pipeline or related facility "pertains to a well" did not lend itself to a bright line standard, but that each such case would require a fact-intensive analysis. We stated:

[I]n recognition of the fact that in each situation there should be a reasonably determinable point at which the gas can no longer be identified with a particular well, or is so fundamentally changed in processing, commingling, or preparing it for distribution to its ultimate end user, that the gas no longer "pertains to a well," we are able to discern several factors relevant to the process of determining that point. These include, without limitation,

(1) whether the structures or facilities to which the contract applies or with which it is associated, e.g., production platforms, pipelines, junction platforms, etc., are part of an in-field gas gathering system;

(2) what is the geographical location of the facility or system relative to the well or wells;

(3) whether the structure in question is a pipeline or is closely involved with a pipeline;

(4) if so, whether that line picks up gas from a single well or a single production platform ¹⁰ or instead carries commingled gas originating from different wells or production facilities;

(5) whether the pipeline is a main transmission or trunk line;

(6) what is the location of the facility or structure relative to compressors, regulating stations, processing facilities or the like;

(7) what is the purpose or function of the facility or structure in question;

(8) what if any facilities or processes intervene between the wellhead and the structure or facility in question, e.g., "heater treaters," compressor facilities, separators, gauging installations, treatment plants, etc.;

(9) who owns and operates the facility or structure in question, and who owns and operates the well or wells that produce the gas in question;

(10) and any number of other details affecting the functional and geographic When we examined the facts presented in summary judgment evidence in light of the inquiries set forth on the foregoing list, we were unable to determine whether the contract for the work to be performed on the pipeline facility in question "pertained to a well." Accordingly, we remanded to the district court for further proceedings.

nexus between "a well" and the structure or facility that is the object of the agreement under scrutiny. ¹¹

We are not so constrained in this case. Here it is undisputed by any party that the Sheehan/Transco contract was one for the construction of an intermediate segment of an interstate gas transmission pipeline. While not conclusive, those features are sufficient to eschew the required nexus with "a well" unless contrary facts are presented to create a genuine issue of fact. As nonmovants, Sheehan and Home were obliged to come forward with specific facts, along the lines of the information suggested in Transco (Lloyds), to show that there is such a genuine issue for trial. ¹² As they failed to do so, the record is devoid of any evidence that the pipeline in any way "pertained to a well." In fact, in their "Memorandum in Opposition to Motion for Summary Judgment," Sheehan and Home concede that the subject pipeline...