Olsen v. Shell Oil Co.
| Citation | 595 F.2d 1099 |
| Decision Date | 25 May 1979 |
| Docket Number | No. 75-4019,75-4019 |
| Parties | Mary OLSEN, Plaintiff-Appellant Cross-Appellee, v. SHELL OIL COMPANY et al., Defendants-Appellees Cross-Appellants, v. ARGONAUT INSURANCE COMPANY, Intervenor-Appellant. Christine W. CARVIN, Plaintiff-Appellant Cross-Appellee, v. SHELL OIL COMPANY et al., Defendants-Third-Party Plaintiffs Appellees-Cross-Appellants, v. TELEDYNE MOVIBLE OFFSHORE, INC., et al., Third-Party Defendants-Appellees Cross-Appellants, Argonaut Insurance Company, Intervenor-Appellant. Frank Winston BOOKER et al., Plaintiffs-Appellees, v. SHELL OIL COMPANY et al., Defendants-Appellants. Gordon Davis WALLACE, Plaintiff-Appellant Cross-Appellee, v. SHELL OIL COMPANY et al., Defendants-Appellees Cross-Appellants, v. ARGONAUT INSURANCE COMPANY, Intervenor-Appellant. ARGONAUT INSURANCE COMPANY, Plaintiff-Appellant Cross-Appellee, v. SHELL OIL COMPANY et al., Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Joel L. Borrello, New Orleans, La., for Argonaut Ins. Co.
Donald A. Hoffman, New Orleans, La., for Pacific Employers Ins. Co.
John O. Charrier, Jr., New Orleans, La., for Shell Oil Co.
W. K. Christovich, Charles W. Schmidt, III, New Orleans, La., for Teledyne Movible.
Francis G. Weller, New Orleans, La., for Wiegand Co. & Thermo-Disc, Inc.
Patrick T. Caffery, W. Eugene Davis, New Iberia, La., for Texsteam Corp.
Appeals from the United States District Court for the Eastern District of Louisiana.
Before GOLDBERG and FAY, Circuit Judges, and DUMBAULD *, District Judge.
This controversy involves the explosion of an electric water heater situated in the living quarters of a drilling platform owned by Shell Oil Company (Shell). The drilling was being conducted from the platform by Movible Offshore Inc. (Movible) which had entered into a standard drilling contract with Shell. The insurance company for Movible until November, 1969 was Pacific Employers Insurance Company (Pacific), an affiliate of the Insurance Company of North America (INA). The policy of insurance issued by Pacific to Movible contained the following language with respect to safety inspections:
The Company and any rating authority having jurisdiction by law shall each be permitted but not obligated to inspect at any reasonable time the work places, operations, machinery and equipment covered by this policy. Neither the right to Under Movible's own inspection program daily inspections took place directed by the Movible toolpusher and weekly visitations to the rigs were made by Movible's Drilling Superintendent and his assistant. There were also daily safety meetings before each crew went to work and there were weekly safety meetings in which all men in the movable rig in the platform participated. Throughout the policy period with Pacific, Movible continued to perform safety inspections. INA also conducted periodic safety inspections of the rigs. On January 22-23 INA's inspector, Gilbert J. Stansbury, inspected the hot water heaters in the pantry and in the galley of the living quarters on the rig. Stansbury made recommendations in writing to Carroll Desormeaux, the Movible toolpusher who accompanied him in the inspection. One of Stansbury's recommendations was that the fusible plug relief valves be changed to temperature pressure relief valves. Prior insurers had also made the same recommendation to Movible with respect to these valves. Instead of ordering pressure-temperature relief valves, however, Movible ordered and installed pressure relief valves. Toolpusher Carroll Desormeaux neglected to tell Movible's purchasing agent that the valves were to be placed on hot water heaters. On January 29, 1969, Movible placed an order with the area Texsteam distributor, Pneumatic Service and Equipment, Inc. for two 3/4 inch, 5550 Texsteam relief valves set at 125 pounds. The valves were replaced on February 3, 1969 and on October 7, 1969 Stansbury returned to the rig and interviewed Desormeaux's replacement, Wyman Haas. In his deposition Stansbury stated that if Haas had verbally assured him that the proper valves had been installed, he would have taken Haas' word for it.
make inspections nor the making thereof nor any report thereon shall constitute an undertaking on behalf of or for the benefit of the insured or others, to determine or warrant that such work places, operations, machinery or equipment are safe.
On November 1, 1969, INA lost the Teledyne account (which included Movible Offshore Inc.) to Argonaut which provided Movible's insurance at the time of the explosion on May 6, 1970. Argonaut intervened in all of these consolidated cases; it also filed a separate suit against the various defendants to recover the money paid on behalf of the injured parties.
In our previous opinion we held that Shell was not liable for breach of certain federal regulations issued by the Secretary of the Interior pursuant to the authority granted to the Secretary by the Outer Continental Shelf Lands Act, 43 U.S.C. § 1334 because the Act did not specifically provide a civil remedy for violations of the statute or regulations and because we felt this was not the type of situation in which a cause of action should be implied or created. 1 We also concluded that in view of the fact that there was no clear precedent it was impossible to rule on the issue of Shell's liability under Louisiana Civil Code Art. 2322. Therefore, we certified the question to the Louisiana Supreme Court which held that Shell was strictly liable under Article 2322. Olsen v. Shell Oil Co., 365 So.2d 1285 (La.1977).
As far as the remaining issues we find that 1) the trial court was correct in granting indemnity to Shell; 2) the holding that Movible was negligent and that this negligence was the proximate cause of plaintiffs' injuries was not clearly erroneous; 3) the holding that the Texsteam valve was not defective was not clearly erroneous; 4) there was sufficient evidence from which the trial judge could have determined that the INA inspector was not negligent; 5) in view of the decision by the Louisiana Supreme Court, the trial court's conclusion that to allow Argonaut to maintain its suit would serve no purpose was incorrect. 2
The trial court found that under an agreement between Shell and Movible the latter was obligated to indemnify Shell for negligence on its part causing liability to Shell.
A contract to indemnify and hold harmless, if applicable, includes payment of costs and attorney's fees incurred by the indemnitee (Shell). See Loffland Bros. Co. v. Roberts, 386 F.2d 540, 550-551 (5th Cir. 1967). Movible (the indemnitor) argues, however, that no one can obtain indemnity from an employer for injuries or losses sustained by its employees because workmen's compensation is intended to be the exclusive liability of the employer. It is true that Movible's exclusive liability to its employees is under the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. § 905. Although Movible is not liable to plaintiffs for negligence because Section 5 of the Act destroys any underlying tort liability on the part of the employer, Robin v. Sun Oil Co., 548 F.2d 554, 556 (5th Cir. 1977), Shell is not barred from recovering under the indemnity contract executed by both parties.
In Ocean Drilling & Exp. Co. v. Berry Bros. Oilfield Service, 377 F.2d 511 (5th Cir.), cert. denied, 389 U.S. 849, 88 S.Ct. 102, 19 L.Ed.2d 118 (1967), this Court held that the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. § 905 makes workmen's compensation benefits the exclusive liability of an employer to its employees or to anyone claiming under or through such employee. 377 F.2d at 514 Quoting Ryan Stevedoring Co. v. Pan-Atlantic SS Corp., 350 U.S. 124, 129, 76 S.Ct. 232, 235, 100 L.Ed. 133 (1956). 3 This Court in Berry Bros. refused to extend the Ryan doctrine to the facts of that case where the injuries were sustained on a stationary offshore platform rather than a vessel. 4 Similarly, in the case before us the injuries occurred on a stationary offshore platform. This Court held in Berry Bros. that ODECO was not entitled to recovery under the warranty of workmanlike performance expounded by the Ryan case nor under maritime tort principles. 377 F.2d at 513. However, Berry Bros. specifically left open the possibility of a party contracting to indemnify another party: 5
Thus, while 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, in the absence of such obligation, as here, there simply exists no underlying tort liability 377 F.2d at 514-515. See Cole v. Chevron Chemical Co. Oronite Division, 477 F.2d 361, 367-368 (5th Cir. 1973).
upon which to base a claim for indemnity against the employer.
No underlying public policy, no statute and no case law prevents two parties such as Shell and Movible from entering into a contract to indemnify the owner of the platform (Shell) for its liability arising from injuries sustained due to the negligence of the contractor-employer (Movible). The trial court was correct in finding that the contract required Movible to indemnify Shell for attorney's fees and costs. Since the trial court found no liability on Shell's part, it was not necessary for it to go any further on the issue of indemnity. The extent of indemnity for the damages which Shell must now assume by being strictly liable will need to be reconsidered by the trial court. Our holding on this issue is restricted solely to the finding that the intention of the parties is clear on the face of the document and that Shell is entitled to indemnity for the damages caused as a result of Movible's negligence.
It is our duty to interpret contracts strictly and to accord the words of a contract...
To continue reading
Request your trial
-
Jackson v. Tenneco Oil Co.
...thereby eliminating any basis which may have existed for indemnification on a tort theory. Id. See also, Olsen v. Shell Oil Company, 595 F.2d 1099, 1103 (5th Cir.1979). The Halcyon and Atlantic Coastline opinions were dismissed as irrelevant in a footnote by the Supreme Court in Lockheed. I......
-
Carney v. Marathon Oil Co., Civ. A. No. 83-2517.
...performance as a duty a stevedore owes a platform owner upon which a platform owner's indemnity action may be had. Olsen v. Shell Oil Co., 595 F.2d 1099, 1101 (5th Cir.), cert. denied, 444 U.S. 979, 100 S.Ct. 480, 62 L.Ed.2d 405 (1979); Law v. Sea Drilling Corp., 510 F.2d 242 (5th Cir. 1975......
-
Continental Cas. Co. v. Canadian Universal Ins. Co.
...an express contract for indemnity that superseded both any implied warranty and any implied right to indemnity. Compare Olsen v. Shell Oil Co., 5 Cir. 1979, 595 F.2d 1099. Whether, in addition, Continental Diving would have owed Aquatic indemnity on delictual principles is, therefore incons......
-
Olsen v. Shell Oil Co.
...now appearing before us for the third time. See Olsen v. Shell Oil Co., 561 F.2d 1178 (5th Cir.1977) (Olsen I ); Olsen v. Shell Oil Co., 595 F.2d 1099 (5th Cir.1979) (Olsen II ). Following the remand in Olsen II, the district court entered a judgment adopting and modifying a special master'......