Molett v. Penrod Drilling Co.

• Decision Date: 15 September 1987
• Docket Number: COLUMBUS-M,No. 86-4665,86-4665
• Parties: , Prod.Liab.Rep.(CCH)P 11,575 Bess Caroline MOLETT, Individually and on Behalf of her son, John Dreisch, Plaintiffs, v. PENROD DRILLING CO., Defendant-Appellee. GEARENCH, INC., Defendant-Third Party Plaintiff-Appellee-Appellant, v.cKINNON, INC., Third Party Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1419

826 F.2d 1419

1988 A.M.C. 2112, Prod.Liab.Rep.(CCH)P 11,575

Bess Caroline MOLETT, Individually and on Behalf of her son, John Dreisch, Plaintiffs, v. PENROD DRILLING CO., Defendant-Appellee.

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

No. 86-4665.

United States Court of Appeals Fifth Circuit.

Sept. 15, 1987.

Rehearing Denied Oct. 13, 1987.

David R. Frohn, Camp, Carmouche, Barsh, Gray, Hoffman & Gill, Lake Charles, La., for Columbus-McKinnon, Inc.

Jeffrey A. Rhoades, Davidson, Meaux, Sonnier & McElligott, V. Farley Sonnier, Lafayette, La., for Gearench, Inc.

Daniel Meeks, Abbott, Webb, Best & Meeks, Michael J. Kincade, New Orleans, La., for Penrod Drilling.

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

Before RUBIN, GARZA, and JONES, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

The seller of a chain compromised a liability suit against it and seeks indemnity from the manufacturer of the chain pursuant to its third party demand in that suit. The district court held that the chain was defective, and the seller who marketed the chain under its own name was entitled to indemnification from the manufacturer of the chain but not to contribution from the owner of the barge on which the accident occurred. Both the manufacturer and the seller appealed. We hold that the manufacturer must fully indemnify the seller for the amount reasonably paid in settlement, remand for determination of reasonableness of the amount paid, and pretermit decision on the seller's conditional appeal against the ship owner.

I.

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 had contracted with Marathon LaFourneau Company to construct the rig at Marathon's shipyard near Vicksburg, Mississippi. After Marathon had virtually completed the rig, Marathon had it towed to Belle Chasse, Louisiana, for final outfitting, including erection of leg sections and a derrick that would have been too tall to pass under bridges between Vicksburg and the Gulf of Mexico. Marathon subcontracted with McBroom Rig Builders, Inc., Molett and Landry's employer, to erect the derrick.

On the day of the accident, Molett and Landry were completing construction of the top sections of the derrick. To lift materials to the top of the derrick, McBroom used an apparatus known as a "gin pole" which had been fabricated by Penrod. 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. As construction of the derrick progressed it was necessary from time to time to "jump" the gin pole farther up the derrick so that materials could be lifted higher. "Jumping the gin pole" was accomplished by securing a chain around the uppermost derrick beams and suspending from the chain a pulley system designed to draw up the pole. The base of the gin pole would then be detached from the derrick, the lift executed, and the gin pole resecured.

The "jump" during which the accident occurred was the first one attempted that day. Molett and Landry were standing on a scaffold 147 feet above the rig floor waiting for the gin pole to be raised. To lift the gin pole, McBroom employees wrapped a new spinning chain around the top derrick beams and attached to it a snatch block and related tackle. Two hooks had been attached to the chain, and one was inserted into the chain to secure it to the beam. The second hook was left dangling, unused, over the side of the beam. As the lift was attempted, the gin pole suddenly broke loose and fell, hitting the scaffold on which Molett and Landry 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 searched for evidence of its cause. They 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, Marathon, and other companies believed to be the manufacturers of the chain and hook used to lift the gin pole when the accident occurred. 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, contending that Penrod was at fault for failing to ensure that McBroom employees used safety lines.

The case was tried before a jury with attorneys representing all named parties present. 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 is governed by Sec. 905(b) of the Longshore and Harbor Workers' Compensation Act ¹ 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. ² It therefore concluded that Gearench's claim against Penrod must fail.

The court next concluded that Columbus McKinnon, as the actual manufacturer of a defective product that caused the deaths, is strictly liable in tort for the damages under either Louisiana or maritime law. The court concluded that, because Gearench had held the product out as its own, Gearench's liability to members of the public injured by the product mirrors that of the manufacturer. After reviewing related law, however, the court determined that under both Louisiana and maritime law a non-negligent "professional vendor" is entitled to indemnity from the negligent manufacturer and therefore that Gearench was entitled to indemnity from Columbus McKinnon. It made no finding concerning the reasonableness of the amount paid in settlement.

Columbus McKinnon now appeals from the judgment against it contending: (1) the district court denied Columbus McKinnon its right to a jury trial by adopting the role of fact-finder in deciding the third-party claims; (2) the record is inadequate to support a finding that a manufacturing defect in the chain caused the accident; (3) Louisiana law should be applied to the indemnity claim against Columbus McKinnon, and under Louisiana law a professional vendor such as Gearench is considered a joint tort-feasor ineligible to recover full indemnification; and (4) if maritime law applies, Gearench is not entitled to indemnity on a mere showing of potential liability to the plaintiffs because it failed to provide Columbus McKinnon a meaningful opportunity to approve the settlement or assume defense of the suit before entering a settlement agreement. As a protective measure only, Gearench contends that, if it is not entitled to be indemnified fully by Columbus McKinnon, it is entitled to indemnity or contribution from Penrod.

II.

Columbus McKinnon's contention that it was entitled to have factual issues relevant to its potential liability decided by a jury comes too late. The case has already been fully presented to a jury at a trial in which all interested parties were represented and afforded the opportunity to question witnesses and present evidence. Interrogatories relevant to each of Gearench's third-party claims had been drafted and submitted to the jury, and, by the time the settlement agreement was announced, the jury was prepared to deliver its verdict. At that time, any party had the right to demand that the verdict be read. Columbus McKinnon, however, remained silent as the trial judge announced his intention to decide the third-party claims himself and to discharge the jury. Even when it filed its post trial memorandum three weeks later, Columbus McKinnon gave the court no indication that it objected to the court's...