Melancon v. Amoco Production Co.

• Decision Date: 06 January 1988
• Docket Number: 86-4859,Nos. 86-4491,s. 86-4491
• Citation: 834 F.2d 1238
• Parties: Daniel MELANCON, et al., Plaintiffs, v. AMOCO PRODUCTION CO., etc., Defendant-Appellant, v. BERAUD ENTERPRISES, INC., Third Party Defendant-Appellee. Daniel MELANCON and Tressella Aymond Melancon, Plaintiffs-Appellants, and American General Fire & Casualty, Co., Intervenor-Appellant, v. AMOCO PRODUCTION CO., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1238

834 F.2d 1238

Daniel MELANCON, et al., Plaintiffs, v. AMOCO PRODUCTION CO., etc., Defendant-Appellant, v. BERAUD ENTERPRISES, INC., Third Party Defendant-Appellee.

Daniel MELANCON and Tressella Aymond Melancon, Plaintiffs-Appellants, and American General Fire & Casualty, Co., Intervenor-Appellant, v. AMOCO PRODUCTION CO., Defendant-Appellee.

Nos. 86-4491, 86-4859.

United States Court of Appeals Fifth Circuit.

Jan. 6, 1988.

As Amended on Denial of Rehearing March 22, 1988. ^*

Jacque B. Pucheu, Pucheu & Pucheu, Eunice, La., for plaintiffs-appellants.

Edward J. Marquet, Juneau, Hill, Judice, Marquet, Hill & Adley, Lafayette, La., for American General Fire & Cas. Co.

John O. Charrier, Jr., Patrick H. Patrick, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, La., for Amoco Production Co.

Richard A. Chopin, Metairie, La., for Beraud Enterprises.

Appeals from the United States District Court for the Western District of Louisiana.

Before REAVLEY, WILLIAMS and HIGGINBOTHAM, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Appellants Daniel Melancon and his wife, Tressella Aymond Melancon, sued Amoco Production Company claiming damages based upon Daniel Melancon's work related injury. Appellant, American General Fire & Casualty Company, intervened. The district court dismissed the suit on the basis of its finding that Mr. Melancon was a "borrowed employee" of Amoco, and therefore the suit against Amoco was barred by the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. Sec. 905(a). The Melancons and the intervenor insurance company appeal. We affirm the district court.

Amoco Production Company appeals the district court's dismissal of its indemnification claims against Beraud Enterprises, Inc. We disagree with the district court that Amoco is not entitled to indemnity from Beraud under the terms of the contract between those two parties. We reverse the district court's dismissal of Amoco's indemnity claim and remand for a determination of Amoco's costs incurred in defending the suit.

I. Factual Background

On August 11, 1984, while on the payroll of Beraud Enterprises, Inc. as a licensed welder, but while working on a platform owned and operated by Amoco Production Company located on the Outer Continental Shelf off the Louisiana coast, Daniel Melancon sustained personal injuries during the course of his work. Melancon alleges he injured his back while carrying a heavy valve at the request of an Amoco employee.

Melancon had been with Beraud Enterprises since 1977. Beraud, a Louisiana business, primarily runs a machine shop that does fabrication work for various oil companies. Mr. Melancon, however, had been assigned by Beraud to work offshore as a production welder for Amoco for approximately five years prior to the August 11, 1984, accident. Melancon worked entirely on Amoco's offshore platforms during this five year period except for a six month period in 1980-81 when he worked onshore in Beraud's machine shop, and a period in 1981-82 when he suffered an on the job injury.

Melancon worked a seven days on/seven days off shift for Amoco. Melancon was transported to and from the platforms by Amoco along with the Amoco crew, ¹ and Melancon stayed in the same bunkhouse and ate the same food as the Amoco crew. Melancon was the only welder on his shift, but another welder, not employed by Beraud, worked during the other seven day shift. Beraud billed Amoco $29 an hour for Melancon's services and from that Beraud paid Melancon $10 an hour. Beraud furnished Melancon a welding machine, a cut torch, and related welding equipment at no additional charge to Amoco. ² Beraud also furnished Melancon with a helper, but this helper could also be worked as a roustabout with the Amoco crew. Amoco provided all the materials that were to be welded. Melancon provided his own safety equipment (safety toe shoes, his welding hood and cap). Amoco did not regularly make safety equipment available to Melancon although it did provide safety equipment to its employees.

Melancon was a production welder (or field maintenance welder) who took most of his orders from Amoco field foreman Dennis LeMaire while working in the Amoco offshore field. Beraud gave Melancon no instructions beyond doing whatever work was required by Amoco. Beraud generally had no contact with Melancon during Melancon's shifts unless something went wrong. Melancon merely reported to Beraud once every two weeks in order to report his hours. Melancon, of course, chose the manner in which to do his welding work according to his professional judgment, ³ but Amoco field foreman LeMaire and other Amoco employees could tell Melancon when to do the welding work and when to do other kinds of work. Melancon was given instructions as to what welding maintenance work to perform during his seven day hitches in the Amoco field by either LeMaire or the pumper in charge of a particular platform. ⁴ Melancon could determine what types of materials were needed for his welding work and request that Amoco order them. Melancon also supervised several Amoco employees who occasionally were sent to assist him in performing his work. While Amoco could not terminate Melancon's employment with Beraud, Amoco could ask that Melancon be replaced by another welder in the Amoco field.

When there was no welding work to be done, Melancon did any other work that was assigned to him by the field foreman or the pumpers, including cooking dinner. This nonwelding work accounted for about 20% of Melancon's time. Amoco paid Beraud, and Beraud in turn paid Melancon, the same hourly welder's rate regardless of what type of work Melancon performed.

There was a "Well and Lease Service Master Contract" between Amoco and Beraud, purportedly covering the terms and conditions of Melancon's work for Beraud on Amoco's platforms. This contract apparently was entered into on July 26, 1983. Provision 6 of this contract says essentially that no employee of Beraud is to be deemed for any purpose the agent, servant, or representative of Amoco. ⁵ Provision 10 of the contract apparently requires Beraud to defend, indemnify, and hold Amoco harmless from and against any and all losses, costs, expenses and causes of action, including attorney's fees and court costs, for injuries to and death of Beraud's employees, including those that arise out of Amoco's negligence. ⁶ Provision 11 requires Beraud to secure and maintain various types of insurance, including worker's compensation, during the term of the contract. ⁷ Finally, the contract obligates Beraud to perform all jobs with due diligence and in a good and workmanlike manner. ⁸

II. Proceedings in the District Court

Melancon and his wife filed suit in federal district court in Louisiana against Amoco as owner of the platform for his injuries arising from the August 11, 1984, incident. Beraud Enterprises was not named as a defendant in the Melancons' complaint. The Melancons alleged Amoco's negligence and/or legal fault was the sole cause of Mr. Melancon's injuries. Amoco answered, denying any liability to the Melancons.

Amoco then filed a third party complaint against Beraud Enterprises seeking tort and contractual indemnity for any damages the Melancons might recover from Amoco and for Amoco's costs of defending itself. Amoco sought indemnity under the terms of Provision 10 of its contract with Beraud, on the basis of an active/passive theory of tort indemnity, and based on an alleged breach by Beraud of the express warranty of workmanlike performance in the Amoco-Beraud Contract or an alleged implied warranty of workmanlike performance.

Beraud filed a motion for summary judgment seeking dismissal of Amoco's third party indemnity claims against it. The district court granted Beraud's motion for summary judgment and entered final judgment under Federal Rule of Civil Procedure 54(b) in Beraud's favor on June 12, 1986. The district court held that neither express contractual nor tort indemnity was owed to Amoco by Beraud, and that Amoco could not seek indemnity from Beraud on a theory of implied warranty under Louisiana law nor under any express warranty of workmanlike performance in the contract. The district court held that the Louisiana Oilfield Indemnity Act expressly precluded some of Amoco's indemnity claims against Beraud. Amoco appeals this holding.

The Melancons' case against Amoco was tried on October 1, 1986, by the district court without a jury. Beraud's worker's compensation carrier, American General Fire & Casualty, had earlier intervened to recover both the medical and weekly compensation benefits it had paid Melancon prior to and through the date of the trial, pursuant to the Longshoremen and Harbor Workers' Compensation Act, 33 U.S.C. Sec. 901 et seq. The district court heard all the evidence on the "borrowed employee" issue, and on November 3, 1986, issued oral findings holding that Mr. Melancon had been a "borrowed employee" of Amoco, and his exclusive remedy against Amoco for his injuries was the LHWCA benefits. Amoco moved for involuntary dismissal based upon this holding. The district court granted Amoco's motion and dismissed the Melancons' suit against Amoco. The Melancons and American General appeal the district court's finding of "borrowed employee" status.

III. Was Daniel Melancon a "Borrowed Employee" of Amoco?

All the parties agreed that the question of Mr. Melancon's status as a "borrowed employee" of Amoco constituted a threshold issue for the Melancons' recovery from Amoco. If Mr. Melancon was found to be the "borrowed employee" of Amoco, he was covered by the LHWCA, entitling him to worker's compensation under this Act. Worker's compensation under the LHWCA is the exclusive remedy for an employee against his employer because the Act bars all common law tort actions against the employer, and Amoco was the employer if Melancon was Amoco's "borrowed employee." ⁹ Alday v. Patterson Truck Line ...