Molett v. Penrod Drilling Co.

• Decision Date: 19 May 1989
• Docket Number: COLUMBUS-M,No. 88-4136,88-4136
• Citation: 872 F.2d 1221
• Parties: Bess Caroline MOLETT, Individually and on Behalf of her minor son, John Dreisch Molett, IV, et al., Plaintiffs, v. PENROD DRILLING CO., et al., Defendants. GEARENCH, INC., Defendant-Third Party Plaintiff-Appellee, v.cKINNON, INC., Third Party Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1221

872 F.2d 1221

Bess Caroline MOLETT, Individually and on Behalf of her minor son, John Dreisch Molett, IV, et al., Plaintiffs, v. PENROD DRILLING CO., et al., Defendants.

GEARENCH, INC., Defendant-Third Party Plaintiff-Appellee, v. COLUMBUS-McKINNON, INC., Third Party Defendant-Appellant.

No. 88-4136.

United States Court of Appeals Fifth Circuit.

May 19, 1989.

Kenneth G. Engerrand, G. Byron Sims, Houston, Tex., for third party defendant-appellant.

Jeffrey Rhoades, Lafayette, La., for Gearench, Inc.

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

Before THORNBERRY, KING and JONES, Circuit Judges.

PER CURIAM:

This is an appeal from the remand of this case after our opinion in Molett v. Penrod Drilling Co., 826 F.2d 1419 (5th Cir.1987) (Molett I ). At issue for the first time in the litigation is the jurisdiction of the federal courts to adjudicate a claim for indemnity between a defendant and third-party defendant. We conclude that we lack admiralty jurisdiction over the claim in question, but we remand to the district court to allow the third-party plaintiff to amend its complaint to attempt to cure a defect in the allegations of diversity jurisdiction.

BACKGROUND

On January 27, 1983, John Molett, III and Harold E. Landry were killed in an accidental fall while constructing the derrick on a jack-up barge owned by Penrod Drilling Company (Penrod). ¹ The rig had been in construction near Vicksburg, Mississippi, but the derrick had to be completed at Belle Chasse, Louisiana, since it otherwise would have been too tall to pass under bridges between Vicksburg and the Gulf of Mexico. Therefore, the contractor had the rig towed to Belle Chasse and subcontracted with McBroom Rig Builders, Inc. (McBroom), who employed Molett and Landry, to finish the derrick.

To lift materials to the top of the derrick, Penrod had fabricated a "gin pole." The forty-foot pole was equipped with pulleys and other tackle with one end anchored to the derrick so that the upper end of the pole could be suspended leaning away from the derrick structure and used as a portable stiff-leg crane. It was necessary from time to time to "jump" the gin pole farther up the derrick so that materials could be lifted higher.

On the day of the accident, Molett and Landry were standing on a scaffold 147 feet above the rig floor waiting for the gin pole to be raised. As the lift was attempted, the gin pole suddenly broke loose and fell, hitting the scaffold on which the men were standing and sending them and most of their equipment tumbling to the rig floor. In violation of state, federal, and company safety regulations, neither man was wearing a safety line when the accident occurred.

After the accident, McBroom employees discovered a chain still hanging from the top derrick beam, almost entirely unwound and missing one hook, and the snatch block intact on the rig floor. The missing hook and any remnant of chain that may have been attached to it were never recovered, evidently having fallen into the river.

The survivors of Molett and Landry brought wrongful death actions against Penrod and other companies believed to be the manufacturers of the chain and hook used to lift the gin pole when the accident occurred. ² Ultimately, it was discovered that the chain bore the trademark of Gearench, Inc., and that the hook was manufactured by Kulkoni, Inc. The complaint was therefore amended to name those companies as defendants guilty of manufacturing defective products. Thereafter, Gearench filed a third-party demand against Columbus-McKinnon, Inc., contending that Columbus-McKinnon had actually manufactured the allegedly defective chain and that Gearench had not contributed in any way to any defect that might have existed. Gearench also sought contribution from Penrod for any liability imposed against it.

The case was tried before a jury. On the fourth day of trial, during jury deliberations, Gearench settled with the plaintiff families, paying $1 million to each. While counsel were informing the court of the settlement agreement, the jury sent notice that it had reached a verdict. The trial judge announced that, because a settlement had been reached, he would decide Gearench's third-party claim for indemnity and contribution against Columbus-McKinnon and Penrod. None of the parties objected, and, in the presence of counsel, the judge discharged the jury without obtaining their verdict. The trial judge then proceeded--after argument and briefing--to decide the remaining issues.

The district court held that the gin pole fell because the chain by which it had been suspended broke. Although Gearench had sold the chain under its trademark as its own product, the court found that the chain had actually been manufactured by Columbus-McKinnon, that it was unreasonably dangerous in normal use (hence defective), and that the defect caused the accident. The court concluded further that Gearench was unaware of the defect and in no way caused or contributed to the problem. Similarly, Penrod was found blameless for the fact that McBroom employees were working on its vessel without safety lines.

In its conclusions of law, the district court held that Gearench's third-party demand against Penrod for indemnity or contribution was governed by 33 U.S.C. Sec. 905(b) of the Longshore and Harbor Workers' Compensation Act (LHWCA) ³ and that Gearench failed to establish that Penrod had actual knowledge of a dangerous condition leading to the decedents' deaths or was aware that McBroom was unreasonably failing to protect its employees from such a condition. ⁴ It therefore rejected Gearench's claim against Penrod.

The court next concluded that Columbus-McKinnon, as the actual manufacturer of a defective product that caused the deaths, was strictly liable in tort for the damages under either Louisiana or maritime law. Consequently, Gearench was entitled to indemnity from Columbus-McKinnon. The court did not rule on the reasonableness of the amount paid in settlement.

In Molett I, Columbus-McKinnon appealed from the indemnity judgment against it. Gearench appealed from the judgment denying indemnity and contribution from Penrod only to the extent that this Court did not uphold its right to full indemnity from Columbus-McKinnon. We held that Gearench's claim for indemnity or contribution against Columbus-McKinnon was not governed by maritime law because that claim lacked any traditional maritime flavor. 826 F.2d at 1428. However, the Court upheld Gearench's right to indemnity from Columbus-McKinnon under Louisiana law and remanded the case only for findings of fact regarding the reasonableness of the settlement under Louisiana law. 826 F.2d at 1428-29.

On remand, the district court determined that the full amount of the settlement was reasonable. Columbus-McKinnon now appeals from the judgment on remand contending: (1) that the federal courts lack jurisdiction since diversity of citizenship was never proven and admiralty jurisdiction was rejected in Molett I; (2) that the district court made insufficient findings of fact to support the reasonableness of the settlement award; and (3) that it should not be liable for indemnity because Gearench did not raise the defense of prescription below and did not make a tender of defense until after the settlement was reached. Columbus-McKinnon never contested the federal court's jurisdiction initially or on remand to the district court, or when it appeared previously before this court.

Jurisdiction is the key question before us. There are two paths to jurisdiction over the indemnity case on remand. The first would trace from the original plaintiffs' claims and would be predicated on admiralty or diversity in their original action. The second finds diversity between Gearench and Columbus-McKinnon, the admiralty nature of their dispute having previously been ruled out by Molett I. We shall address the theories in this order.

I. ADMIRALTY JURISDICTION

This Court might assert jurisdiction over Gearench's indemnity claim if: (1) the district court had admiralty jurisdiction over plaintiffs' claims against Penrod, and (2) plaintiffs' claims against Gearench, though not admiralty based, were nevertheless within the district court's pendent jurisdiction, and (3) Gearench's third-party claim against Columbus-McKinnon was within the district court's ancillary jurisdiction. We do not here venture beyond the first of these conjunctive steps.

The plaintiffs' original complaint alleges in part that Penrod was liable for fabricating the derrick so as to require an unsafe method of erection; failing to design the derrick so that it could be safely assembled; furnishing improper or defective equipment, the gin pole; and allowing an improper and negligent method of assembly of the derrick to occur. Jurisdiction was asserted under 28 U.S.C. Sec. 1333 and 33 U.S.C. Sec. 905(b) of the LHWCA. These claims were not specifically at bar when the court in Molett I held that the plaintiffs' products liability claim against the chain manufacturer and Gearench's related claim for indemnity were not maritime torts. We must therefore decide whether the plaintiffs' Sec. 905(b) claim against Penrod is sufficient to invoke this court's admiralty jurisdiction.

Guided by the Supreme Court's holdings in Executive Jet Aviation v. City of Cleveland, 409 U.S. 249, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972) and Foremost Insurance Co. v. Richardson, 457 U.S. 668, 102 S.Ct. 2654, 73 L.Ed.2d 300 (1982), this Circuit applies a two-part inquiry to determine the existence of maritime jurisdiction. "That inquiry is essentially fact-bound, turning on a determination of the location of the tort, the situs factor, and the pertinent activity, the nexus factor." Richendollar v. Diamond M. Drilling Co., 819 F.2d 124, 127 (5th Cir.1987) (en banc). Because Molett's and Landry's deaths occurred on navigable waters, only the nexus prong must...