Marathon Pipe Line Co. v. Drilling Rig ROWAN/ODESSA
| Decision Date | 28 May 1985 |
| Docket Number | No. 84-3525,84-3525 |
| Citation | 761 F.2d 229 |
| Parties | MARATHON PIPE LINE COMPANY, Plaintiff, v. DRILLING RIG ROWAN/ODESSA, et al., Defendants, ROWAN COMPANIES, INC., Defendant-Third Party Plaintiff-Appellant, v. HYDROTECH, et al., Third Party-Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Ernest A. Carrere, Jr. James E. Wright, III, New Orleans, La., for Rowan Companies.
Camp, Carmouche, Palmer, Barsh & Hunter, Donald Ensenat, New Orleans, La., for HydroTech.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before GOLDBERG, RUBIN, and HILL, Circuit Judges.
A jack-up drilling rig ruptured a pipeline lying on the seabed of the Outer Continental Shelf. A part used in repairing the pipeline failed owing to a latent manufacturing defect, causing additional expense to the pipeline owner. The owner of the jack-up rig settled with the pipeline owner for all repair expenses, including those caused by the defective part, and now seeks indemnity or contribution from the part manufacturer for the expenses attributable to its failure.
We hold that this action for indemnity or contribution is governed by maritime, rather than general, tort law and that maritime law grants the original tortfeasor the right to full indemnity from the manufacturer for the expenses incurred as a result of the failure of the defective part. Because this cause of action did not accrue until the tortfeasor was cast in judgment on the principal demand, laches does not bar the action. Accordingly, we reverse the summary judgment dismissing this case and remand it for further proceedings.
A jack-up drilling vessel, the ROWAN/ODESSA, owned by the Rowan Companies (Rowan), was being towed across an oil pipeline owned by Marathon Pipeline Company (Marathon) and lying beneath the sea on the bed of the Outer Continental Shelf adjacent to the state of Louisiana. A leg of the ROWAN/ODESSA ruptured the pipeline, necessitating extensive repairs. These were undertaken by Marathon.
After several days of preparation, a repair crew employed by Marathon began installing a set of sleeve-like "hydrocouples" designed to join the severed ends of the pipeline. The hydrocouples were manufactured and sold by HydroTech Systems, Inc. (HydroTech) and had been purchased by Marathon before the accident. Marathon retained HydroTech to provide technicians proficient in hydrocouple work to supervise the installation process, which took four days to complete.
Four days later the completed hydrocouples failed during routine testing procedures, causing a second rupture in the pipeline. The next day Marathon began repairing its pipeline through a more conventional method: installation of flanges, a process successfully completed in four days. Later HydroTech tested the hydrocouples and found that their failure had been caused by a defect in their manufacture.
HydroTech did not charge Marathon for the services it rendered in connection with the hydrocouple installation and agreed to correct the defects in the other hydrocouples Marathon had purchased. HydroTech did not, however, pay for other repair expenses Marathon incurred as a result of the hydrocouple failure, including barge time, support vessel expenses, and diving and repair crew expenses for the four days spent in installing the defective hydrocouples. The parties have agreed that these expenses amounted to $47,080 per day, thus making the extra repair costs attributable to the hydrocouple failure $188,320.
Invoking general maritime law and the Outer Continental Shelf Lands Act, 1 Marathon sued Rowan and other parties, but not HydroTech, in 1979, seeking damages and repair expenses occasioned by the ROWAN/ODESSA's collision with the pipeline. After a trial on the issue of liability, the district court found Rowan solely liable for the collision. Rowan appealed this judgment and the parties began preparations for the trial of quantum. While the appeal on the issue of liability was pending, Rowan filed a third party demand against HydroTech seeking indemnity or contribution for any repair costs attributable to the hydrocouple failure that Rowan would be compelled to pay. This demand was filed more than three years after the principal suit against Rowan was filed.
The district court granted HydroTech's motion to dismiss Rowan's third party demand, finding the demand time-barred under either the admiralty doctrine of laches or the Louisiana law of prescription. Rowan appeals this dismissal.
Prior to this appeal, Rowan and Marathon settled the amount due on the principal demand. According to the record, Rowan paid for the total repair expenses incurred by Marathon, including the $188,320 attributable to the hydrocouple failure. HydroTech argues that the Rowan-Marathon settlement did not in fact include anything for hydrocouple-related expenses, and that Rowan never conceded liability for those expenses. Rowan and Marathon, HydroTech contends, agreed to a "paper concession" to make the settlement appear to include a sum for the hydrocouple expenses. It argues that the parties reduced the amount paid for another settlement item to compensate for a fictitious sum paid for hydrocouple expenses, thus enabling Rowan to maintain a third party action against HydroTech to recover part of what it paid Marathon.
HydroTech's theory lacks support in the record. It produced no affidavits, depositions, or other evidentiary material to undermine the authenticity of the figures recited in the Rowan-Marathon settlement agreement, which was made a part of the record on appeal. 2 On appeal of the district court's judgment granting HydroTech's motion for summary judgment or dismissal of Rowan's third party action, we must view all evidentiary inferences most favorably to the opponent of the motion. 3 We cannot infer, from HydroTech's unsupported argument relying on a possible disparity in amounts paid for different items, that the Rowan-Marathon settlement is a partial sham. On the record before us, unrebutted by specific evidentiary materials, 4 we must assume for purposes of this appeal that Rowan actually paid Marathon for the expenses attributable to the hydrocouple failure.
HydroTech also contends that, by not charging Marathon for the services it rendered in installing the hydrocouples and by renovating the other hydrocouples Marathon had purchased, it informally settled its liability to Marathon for all hydrocouple-related expenses. It contends that Rowan, therefore, has no indemnity or contribution claim against HydroTech because Marathon has no claim against it.
The district court did not find and the record contains no evidence that Marathon released HydroTech. HydroTech produced no settlement papers or other evidentiary material to support this argument. 5 Although Marathon filed no claim against HydroTech, it assigned any such claim it had to Rowan as part of its settlement agreement with Rowan. While the record indicates that, at the time the instant appeal was filed, Rowan had not filed suit on the assigned claim, the very fact that an assignment was made casts doubt on HydroTech's thesis that Marathon had previously released HydroTech of all liability for the hydrocouple failure. On appeal of the district court's summary judgment in favor of HydroTech, we may not infer that Marathon released HydroTech merely because Marathon accepted the renovated hydrocouples and did not pay HydroTech for its services rendered in installing the first hydrocouples. 6
We turn to whether Rowan has an indemnity or contribution claim against HydroTech and, if so, whether that claim is time-barred. The district court found that, under either the admiralty doctrine of laches or Louisiana's law of prescription, any third party claim Rowan might have was time barred. It, therefore, pretermitted decision on what body of law governs this third party action. Rowan argues that the third party action is governed by maritime law and could, therefore, be barred only by laches. It urges further that it had not delayed in filing this action and that its third party claim was timely.
The result may indeed differ dependent on what body of law governs (a) the availability of a third party claim in this case, (b) when that cause of action accrues, and (c) when it becomes time-barred. It is therefore necessary for us to make a choice of applicable law. To do so, we must first determine what body of law governed the principal defendant's (Rowan's) liability to the principal plaintiff (Marathon) for the repair costs occasioned by the collision with Marathon's pipeline. We must then determine what corpus juris governs the third party defendant's (HydroTech's) liability to Marathon for the extra repair expenses caused by the hydrocouple failure. Having answered these questions, we then choose the body of law applicable to Rowan's third party action against HydroTech.
Rowan's liability to Marathon for repair costs was governed by general maritime law made applicable by the Admiralty Extension Act. 7 Under that statute, the admiralty jurisdiction extends to "all cases of damage ... to property caused by a vessel on navigable water, notwithstanding that such damage or injury be done or consummated on land." In such cases, suit may be brought "according to the principles of law ... obtaining in cases where the injury or damage has been done and consummated on navigable water"--the general maritime law. 8 The ROWAN/ODESSA, a jack-up rig in two to a new site, was a "vessel on navigable water" 9 at the time its leg struck Marathon's pipeline, a fixed structure on the seabed. The district court therefore correctly applied general maritime law on the issue of Rowan's liability for the collision. 10 General maritime law would, of course, also govern Rowan's liability for the various items...
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