Holden v. Placid Oil Co.

• Decision Date: 03 July 1979
• Docket Number: 76-2442 and 76-2799.,Civ. A. No. 75-3236,75-3333
• Citation: 473 F. Supp. 1097
• Parties: Mrs. Linda Harper HOLDEN, Individually and as Natural Tutrix of The Estates of her minor children, Melvin Scott Holden, Sandra Kay Holden and Blake Alan Holden et al., Plaintiffs, v. PLACID OIL COMPANY et al., Defendants.
• Court: U.S. District Court — Eastern District of Louisiana

473 F. Supp. 1097

Mrs. Linda Harper HOLDEN, Individually and as Natural Tutrix of The Estates of her minor children, Melvin Scott Holden, Sandra Kay Holden and Blake Alan Holden et al., Plaintiffs, v. PLACID OIL COMPANY et al., Defendants.

Civ. A. Nos. 75-3236, 75-3333, 76-2442 and 76-2799.

United States District Court, E. D. Louisiana.

July 3, 1979.

Haydn S. Berey, Livingston, La., Adams & Reese, Thomas J. Wyllie, New Orleans, La., for National Union Fire Ins. of Pittsburgh, Pa., intervenor.

Martzell & Montero, New Orleans, La., Seale, Sledge & Ross, Hammond, La., for plaintiffs.

Paul H. Dué, Baton Rouge, La., for Nat. Union Fire Ins. of Pittsburgh, Pa., intervenor; and for plaintiff Mrs. Linda Harper Holden.

John W. deGravelles, Baton Rouge, La., for plaintiff Mrs. Linda Harper Holden.

Charles W. Dittmer, Jr., New Orleans, La., for plaintiff Mrs. Robert Jackson.

Stephen C. Sledge, Hammond, La., for plaintiff Mildred M. Turnbull.

Maurice C. Hebert, Jr., Dean A. Sutherland, Hebert, Abbott & Horack, New Orleans, La., and Armand A. Gutierrez, Dallas, Tex., for defendants Placid Oil Co. and Hartford Acc. & Indem. Co.

Donald L. King, New Orleans, La., Voorhies & Labbe, Lafayette, La., for defendant Michigan-Wisconsin Pipe Line Co.

H. Lee Leonard, James Lambert, Lafayette, La., Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, La., for defendants Michigan-Wisconsin Pipe Line and Harbor Ins. Co.

Patrick T. Caffery, Caffery, Duhe, Oubre & Gibbens, John M. Duhe, Jr., John Blackwell, New Iberia, La., for defendant Gulf Coast and Supply Co.

Charles E. Leche, Normann & Normann, New Orleans, La., for third party T. K. Valve & Mfg., Inc. and Hartford Acc. & Indem. Co.

CASSIBRY, District Judge:

Since 1953, one of the foremost commentators on workmen's compensation has maintained that "perhaps the most evenly-balanced controversy in all of compensation law is the question whether a third party in an action by the employee can get contribution or indemnity from the employer, when the employer's negligence has caused or contributed to the injury." Larson, Workmen's Compensation Law § 76.10, at 14-287 (1974). The instant case presents an intriguing and important variation of this controversy—that in which the theory of indemnity is based not on the negligence of the employer, but rather on its position as the manufacturer of an allegedly defective product that injured its employee.

In September 1975, an accident occurred on a stationary platform owned by Placid Oil Co. (Placid), located on the Outer Continental Shelf. The accident involved an explosion in a pipeline owned by Michigan-Wisconsin Pipeline Co. (Michigan-Wisconsin). It is claimed that a certain valve in the pipeline exploded, which valve was manufactured by T. K. Valve Co. (T. K. Valve) from steel that was supplied by Republic Steel Corp. (Republic) and forged in the rough by Gulf Coast Marine and Supply Co. (Gulf Coast).

Three people were killed by the explosion. Two of them, Turnbull and Holden, were employees of T. K. Valve who were performing repairs on the valve in question. The third, Jackson, was an employee of Placid.

Suits were filed by the survivors of Turnbull, Holden, and Jackson. The instant motion concerns only the Turnbull and Holden cases. In those actions, Placid, Michigan-Wisconsin, Republic, and Gulf Coast are all either defendants or third-party defendants. In these capacities, they have brought cross-claims or third-party claims for indemnity against T. K. Valve. T. K. Valve was not sued by the plaintiffs in the Turnbull and Holden cases because it was the employer of the decedents and had paid compensation under the Longshoremen and Harbor Workers Compensation Act, 33 U.S.C. § 901 et seq. (LHWCA), which applies to this case pursuant to the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq.

By the instant motion, T. K. Valve seeks summary judgment on all indemnity claims asserted against it in the Turnbull and Holden cases. It contends: (1) there was no express indemnity agreement; (2) no warranty of workmanlike performance can be implied to support the indemnity claims here; (3) no other obligation to indemnify can be implied here; and (4) the LHWCA does not allow indemnity based on a tort theory against an employer who has paid compensation.

The first and second points are easily resolved in favor of T. K. Valve. It is uncontroverted that no written agreement exists in this case upon which to base the indemnity claims. Further, the case law is clear that no warranty of workmanlike performance will be implied when work is performed (and an injury suffered) on a stationary platform. ODECO v. Berry Bros. Oilfield Service, 377 F.2d 511, 513 (5th Cir. 1967); Law v. Sea Drilling Co., 510 F.2d 242, 252 (5th Cir. 1975). No state law theory can be advanced to change this result. ODECO v. Berry Bros. Oilfield Service, supra, at n. 4.

The other points in T. K. Valve's argument present a serious legal problem at the heart of which lies the exclusivity provision of the LHWCA:

§ 905.

(a) The liability of an employer prescribed in section 904 of this title shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death. . . .

(b) In the event of injury to a person covered under this chapter caused by the negligence of a vessel, then such person, or anyone otherwise entitled to recover damages by reason thereof, may bring an action against such vessel as a third party in accordance with the provisions of section 933 of this title, and the employer shall not be liable to the vessel for such damages directly or indirectly and any agreements or warranties to the contrary shall be void. . . .

33 U.S.C. § 905 (emphasis added).

Since no party seeking indemnity here is a vessel owner, the explicit Congressional instructions provided in subsection (b) are not applicable, and this case must be resolved under the more general language of subsection (a).

A. The nature of the indemnity that may be sought under § 905(a)

1. Contract

The Fifth Circuit has plainly stated that "the employer may continue, even in spite of the exclusive liability provision of the Act, to remain liable for indemnity on the basis of an express or implied contractual obligation." ODECO v. Berry Bros. Oilfield Service, supra, 377 F.2d at 514-515. Section 905(a) of the Act does not bar such recovery because a claim for indemnity based upon such an obligation is not, in the words of that section, "on account of" the employee's injury or death. Rather, it is grounded upon an independent obligation that exists directly between the indemnitor and the indemnitee. See Larson, Workmen's Compensation Law § 76.30 (1974).

This was the concept relied upon by the Supreme Court when it allowed indemnity to a shipowner based upon the stevedore's breach of its implied warranty of workmanlike performance in Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 126, 129-30, 76 S.Ct. 232, 235, 100 L.Ed. 133 (1956). Although the 1972 Amendments to the LHWCA specifically bar recovery of Ryan indemnity, the Court's approach to the exclusivity provision of the LHWCA is still instructive. In General Electric Co. v. Cuban American Nickel Co., 396 F.2d 89 (5th Cir. 1968), Judge Wisdom followed this approach and traced its origin to the New York case of Westchester Lighting Co. v. Westchester County Small Estates Corp., 278 N.Y. 175, 15 N.E.2d 567. Judge Wisdom quoted the New York judge's succinct statement of the concept: "Plaintiff does not sue for damages `on account of' Haviland's death. Plaintiff asserts its own right of recovery for breach of an alleged independent duty or obligation owed to it by the defendant." 396 F.2d at 91, quoting 15 N.E.2d at 568.

2. Tort

When one considers the possibility of indemnity on a tort basis, the language of some cases seems to indicate that § 905(a) is an absolute bar. ODECO v. Berry Bros. Oilfield Services, supra; Aetna Casualty & Surety Co. v. Service Contracting, Inc., 490 F.2d 299 (5th Cir. 1973). Close examination of the facts of those cases, however, reveals that the only kind of tort indemnity sought was that which rests on the traditional theory of passive-active or secondary-primary negligence. This theory is based on the idea that the indemnitor breached a duty of care it owed to the injured person—and did so in such a manner as to make indemnity appropriate. Recovery of indemnity on this basis is contrary to § 905(b), for such recovery is clearly "on account of" the employee's injury.

It is important to analyze very closely the exact nature of the tort theory of indemnity presented. For example, in White v. Texas Eastern Transmission Corp., 512 F.2d 486 (5th Cir. 1975), a "launch package" exploded, injuring plaintiff White. White's employer, Wheatley, had assembled the package and sold it to defendant Texas Eastern Transmission. Defendant Bettis had manufactured the "actuator valve" incorporated into the package. Bettis sought indemnity from Wheatley. In affirming the district court's dismissal of the indemnity claim, the Fifth Circuit was careful to examine the nature of the duty that the alleged indemnitee claimed was breached. It said:

. . . it is clear from a reading of ODECO v. Berry Bros. Oilfield Services, supra and other cases that there must be some underlying tort liability predicated on a breach of the employer's duty in order for a right of indemnity to arise in a third party. Here, the only breach of duty—and the only resulting theoretical liability—of Wheatley that could be asserted was a duty owed to its employee to assemble the launch package in a non-negligent manner so as to prevent injury to the employee. It is clear beyond doubt under ODECO that § 905 of L & H has

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