Hebert v. Kerr-McGee Corp.

• Decision Date: 22 August 1985
• Docket Number: Civ. A. No. 83-0274.
• Citation: 618 F. Supp. 767
• Parties: Ferdinand J. HEBERT v. KERR-McGEE CORPORATION, et al.
• Court: U.S. District Court — Western District of Louisiana

618 F. Supp. 767

Ferdinand J. HEBERT v. KERR-McGEE CORPORATION, et al.

Civ. A. No. 83-0274.

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

August 22, 1985.

Stephen R. Streete, Salter, Streete & Hale, Lake Charles, La., for plaintiff, Hebert.

Bert M. Cass, Eileen R. Madrid, Deutsch, Kerrigan & Stiles, New Orleans, La., for Kerr-McGee Corp.

W. Gerald Gaudet, Robert L. Ellender, Voorhies & Labbe, Lafayette, La., for Electrical & Instrumentation Unlimited, Inc.

Robert W. Clements, Stockwell, Sievert, Viccellio, Clements & Shaddock, Lake Charles, La., for Crain Bros., Inc.

A.R. Johnson, IV, Plauche, Smith & Nieset, Lake Charles, La., for CNA Ins. Co. and CE Natco.

RULING

VERON, District Judge.

This matter comes before the Court on the motion of third-party defendant Electrical & Instrumentation Unlimited, Inc. EIU for partial summary judgment in its favor dismissing the portion of Kerr-McGee Corporation's third party complaint that seeks contractual indemnity from EIU. The plaintiff in this suit, Ferdinand Hebert, alleges that he was injured when he slipped and fell on an oily deck while employed by C-E Natco on an offshore platform owned and operated by Kerr-McGee on the Outer Continental Shelf off of the Texas coast. Hebert sued Kerr-McGee under the Outer Continental Shelf Lands Act, 43 U.S.C. § 1333. Kerr-McGee in turn third-partied EIU alleging that Hebert's claim was encompassed by an indemnity provision contained in a master service agreement between Kerr-McGee and EIU.

The master service agreement between EIU and Kerr-McGee is dated September 15, 1980. Paragraph 6 of the contract obligates EIU to defend and indemnify Kerr-McGee against the various described claims "whether the same is caused or contributed to by the negligence of Kerr-McGee, its agents or employees." On March 27, 1981, Kerr-McGee issued a work order to EIU for an electrical installation job on Kerr-McGee's High Island Block 508-A platform. The plaintiff allegedly slipped on oil leaking from an EIU temporary generator while operations under the work order were still in progress, on January 24, 1982.

I. ISSUES

In pursuing its motion, EIU contends that the indemnity agreement is invalid under the Louisiana Oilfield Anti-Indemnity Act, La.R.S. 9:2780, or, alternatively, if Louisiana law is not applicable, that Texas law applies to invalidate the agreement, under Tex.Civ.Stat.Ann. art. 2212b. Kerr-McGee in turn responds alternatively (1) that the state anti-indemnity statutes are inconsistent with controlling federal law and that they are therefore inapplicable under the Lands Act, (2) that, if Texas law is in fact applicable, the indemnity provision is enforceable to the extent that EIU has procured insurance pursuant to the master service agreement, and (3) that, if Louisiana law applies, that section 2780 is nonetheless inapplicable on the facts of this case. These varied alternative contentions all lead to one initial issue: Which body of law governs the contractual indemnity claim asserted in this case?

II. CHOICE OF LAW

Federal Law

The laws of the adjacent state are applicable on the Shelf "to the extent that they are applicable and not inconsistent with OCSLA or with other Federal laws and regulations of the Secretary of the Interior." 43 U.S.C. § 1333(a)(2)(A). In United States v. Seckinger, 397 U.S. 203, 90 S.Ct. 880, 25 L.Ed.2d 224 (1970), the Supreme Court held that, under the federal common law governing contracts entered into by the United States, an indemnitee is permitted to recover for claims arising out of its own negligence. 397 U.S. at 209-17, 90 S.Ct. at 884-88. Kerr-McGee points to the inconsistency between the state anti-indemnity statutes and the rule permitting indemnity in Seckinger and urges that the statutes are therefore displaced under the Lands Act. This same contention is now being considered by a panel of the Fifth Circuit. See Doucet v. Gulf Oil Corp., No. 84-3711 (5th Cir., argued July 10, 1985) (pending decision), noted in 2 Fifth Cir. Rep. 465 (1985). The Court will accordingly do little more than note its concurrence with the view that Seckinger is not itself applicable to purely private contracts on the Shelf and that, in any event, the phrase "other Federal laws" in section 1333(a)(2)(A) refers not to federal common law but instead to federal statutory law. See Frazier v. Columbia Gas Development Corp., 596 F.Supp. 429, 430-31 (W.D. La.1984); Greer v. Services Equipment and Engineering, Inc., 593 F.Supp. 1075, 1077-78 (E.D.Tex.1984); see also S.Rep. No. 411, 83d Cong., 1st Sess. 23 (1953), quoted in Rodrigue v. Aetna Casualty and Surety Company, 395 U.S. 352, 357-58, 89 S.Ct. 1835, 1838, 23 L.Ed.2d 360 (1969) ("Paragraph (2) adopts State law as Federal law, to be used when Federal statutes or regulations of the Secretary of the Interior are inapplicable.") (emphasis added); cf. Rigby v. Tenneco Oil Co., 607 F.Supp. 1247 (E.D.La.1985) (the Longshoreman's Act does not bar application of section 2780 on the Shelf except where the 1984 amendments are applicable). The Court therefore holds that the rule enunciated in Seckinger does not displace an adjacent state anti-indemnity statute on the Shelf.

Adjacent State Conflicts Law Under the Lands Act

The interests and contentions of the parties have shifted somewhat during the course of briefing and arguments on this motion. Initially, EIU urged that Texas conflicts law applied here in a fashion that mandated resort to Louisiana contractual indemnity law. As the arguments developed, however, it soon became apparent that this particular contention might better serve Kerr-McGee. The Louisiana Oilfield Anti-Indemnity Act might not apply to bar this particular indemnity claim because the specific work order involved here was issued prior to the statute's effective date.¹ Yet, regardless of these shifting interests, the preliminary issue remains before the Court of whether the Lands Act incorporates the choice-of-law principles of the adjacent state as surrogate federal law.

Broad language in a recent case by the Supreme Court and in another recent case by the Fifth Circuit indicates that the Lands Act supersedes normal choice-of-law rules such that the adjacent state's law of contractual indemnity automatically governs indemnity provisions applicable on the Shelf. See Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 482 n. 8, 101 S.Ct. 2870, 2877 n. 8, 69 L.Ed.2d 784 (1981); Mills v. Zapata Drilling Co., 722 F.2d 1170, 1174 (5th Cir.1983). Yet in neither case was the issue squarely presented of whether the Lands Act carries the adjacent state's choice of law rules out on to the Shelf where those rules merely apply state law that otherwise would govern if the action in fact had arisen within the adjacent state. That precise issue has been raised in this case. The analysis of the question necessarily begins with the Supreme Court's decision in Chevron Oil Company v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971).

In Chevron, the Supreme Court held that Louisiana's one-year prescriptive period, rather than the maritime doctrine of laches, applied to a personal injury action arising on a platform on the Shelf off the Louisiana coast. The court of appeals below had applied maritime law on the theory that, under Louisiana conflicts law, the one-year prescriptive period contained in former article 3536 was not binding outside of a Louisiana forum and that, hence, article 3536 was not applicable in a federal forum hearing a Lands Act case. See Chevron, 404 U.S. at 101-02, 92 S.Ct. at 353. In reversing this decision, the Chevron Court observed:

A federal court applying Louisiana law under § 1333(a)(2) of the Lands Act is applying it as federal law—as the law of the federal forum. Since the federal court is not, then, applying the law of another forum in the usual sense, ordinary conflict of laws principles have no relevance. Article 3536 is "applicable" in federal court under the Lands Act just as it would be applicable in a Louisiana court.

404 U.S. at 102-03, 92 S.Ct. at 353 (emphasis in original). As this Court reads this language, Chevron does not prohibit resort to conflicts principles of the adjacent state in a Lands Act case. Instead, Chevron proceeds from the fundamental premise that adjacent state law applies as the law of the federal forum and demonstrates that, accordingly, the federal forum must be viewed as the local, rather than a foreign, forum when the adjacent state's conflicts principles are applied as surrogate federal law. That is, the error of the lower court lay not in the fact that it applied Louisiana choice of law principles, but in the fact that the court effectively treated the federal Lands Act forum as a foreign forum when it applied those principles as the surrogate law of that forum. Repetition of this error is all that Chevron prohibits. The decision does not bar, and is entirely consistent with, application of adjacent state conflicts law on the Shelf, so long as the Lands Act forum is treated as the local forum for purposes of the conflicts analysis.

This reading of Chevron is consistent with the law in other contexts in which state law is adopted as surrogate federal law. For example, the Federal Tort Claims Act provides for adoption of "the law of the place where the act or omission occurred." 28 U.S.C. § 1346(b). In Richards v. United States, 369 U.S. 1, 82 S.Ct. 585, 7 L.Ed.2d 492 (1962), the Supreme Court reviewed this provision and held that the Tort Claims Act requires application of the whole law of the State where the act or omission occurred, including its conflicts law. 369 U.S. at 11, 82 S.Ct. at 592. Indeed, the Chevron court itself addressed this decision, remarking that "insofar as Richards bears on the present case, it supports our holding that federal courts should not create interstitial federal common law when the Congress has directed that a whole body of state law...