Olsen v. Shell Oil Co.

• Decision Date: 26 October 1977
• 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, v. 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 Cross Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1178

561 F.2d 1178

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, v. 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 Cross Appellants.

No. 75-4019.

United States Court of Appeals Fifth Circuit.

Oct. 26, 1977.

Wm. P. Rutledge, Lafayette, La., for Olsen, et al.

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., other interested parties.

Patrick T. Caffery, New Iberia, La., for Texsteam Corp.

W. Eugene Davis, New Iberia, La., for plaintiff-appellant cross appellee.

Before GOLDBERG and FAY, Circuit Judges, and DUMBAULD, District Judge. ^*

FAY, Circuit Judge:

The controversy before this court is factually complex and presents some novel questions of law. It pertains to the explosion of an electric water heater in the living quarters on a drilling platform on the Outer Continental Shelf. The question is whether there is liability of the platform owner, Shell Oil Company, to some of those people who were either injured or killed as a result of the explosion. The plaintiffs set forth two theories of liability. First, they contend that Shell is answerable for the injuries which have occurred because it violated certain regulations issued by the Secretary of the Interior pursuant to the authority granted to him by the Outer Continental Shelf Lands Act, 43 U.S.C. § 1334 the violation of which was a direct cause of the plaintiffs' injuries. In the alternative, the plaintiffs contend that the Louisiana Civil Code Art. 2322 ¹ imposes a form of strict liability on certain owners of buildings, ² and, as a result, Shell is liable to the plaintiffs regardless of its lack of personal negligence. We hold that Shell is not liable for breach of the federal regulations because the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq., does not provide specifically for a civil remedy for violations of the statute or regulations, and because we feel that this is not the type of situation in which a cause of action should be implied or created. See Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975). We also conclude that it is impossible for us at the present time to rule on the theory of liability based upon Louisiana Civil Code Art. 2322. After an exhaustive study of Louisiana law, we feel that there is no clear controlling precedent from the highest court in that state, and, consequently, we are compelled to certify the issue to the Louisiana Supreme Court.

I. FACTS

On May 6, 1970, a hot water heater explosion occurred aboard a fixed platform owned by Shell Oil Company in the Gulf of Mexico off the coast of Louisiana. The platform was designated as Shell's "C" platform, and drilling was being conducted from the platform by a drilling contractor known as Movible Offshore, Inc. (Movible). The individual plaintiffs in this case are the legal representatives of men killed in the explosion, except for Gordon Wallace who sues for personal injury. The plaintiffs were all employees of Movible.

To conduct the drilling operations from the platform, Movible had located its modular and movable drilling rig on the platform. The rig consisted of all equipment necessary to drill a well, including a derrick or mast, drawworks, the very large engines which were necessary to power the drilling equipment, and all normal appurtenances to a drilling operation. In addition, Movible had its modular living quarters on the Shell platform which provided a galley area for feeding the men, sleeping quarters, shower and bathroom facilities, and a lounge area. The living quarters unit was equipped with two electric water heaters. One water heater was located in the galley area, and another was located in the pantry area. These water heaters were Movible equipment and were wholly owned, as was the living quarters unit, by Movible. The modular living unit was fully movable, and when the rig was moved from one platform to another, it was picked up as a unit by a derrick barge and then transported to a new site and secured on a platform in such a way that cutting and burning of metal would be required to remove it.

Under the working arrangement in effect between Shell and Movible, two Movible drilling crews consisting of six men each worked opposite shifts so that the drilling rig could be kept in operation 24 hours a day. Shell performed none of the actual operations on the rig and had only one permanent representative there.

At the time Movible began drilling for Shell from Platform C or shortly thereafter, Movible took out liability insurance with Pacific Employers Insurance Company (Pacific), an affiliate of the Insurance Company of North America. In addition to providing liability insurance to Movible, Pacific agreed to provide a safety engineering and safety inspection service to Movible. This service was provided largely through one Gilbert Stansbury, a safety and technical representative of Pacific.

In connection with the safety engineering and technical service provided by Pacific, Mr. Stansbury was to visit the Movible rig on a quarterly basis. Mr. Stansbury first visited the rig on January 23, 1969, and then he did not revisit the rig until October 7, 1969. On his first visit, Stansbury inspected the water heaters in the company of Movible's toolpusher, a Mr. Desormeaux. At this time, he recommended (among other things) that a pressure-temperature relief valve be placed on the water heaters in question in place of the existing pressure relief valves. Movible failed to accurately follow the recommendation of Mr. Stansbury, although they should have understood the recommendation since prior insurers had made the same or similar suggestions and Stansbury himself had made the same recommendation during inspections of other Movible rigs. Instead of ordering the proper type of "pressure-temperature" relief valve, Movible ordered and installed another pressure relief valve.

The valves were replaced on February 3, 1969. Mr. Desormeaux inspected the heaters after the installation of the valves and concluded that "everything looked okay." On October 7, 1969, Stansbury returned to the rig and interviewed another Movible toolpusher who had since replaced Mr. Desormeaux. Mr. Stansbury did not make a visual inspection of the water heater but relied on the toolpusher's assurances that his recommendations had been followed. As a result, Stansbury reported that all his recommendations had been fulfilled.

On May 6, 1970, the hot water heater located in the pantry of the living quarters exploded resulting in many deaths and injuries. The trial judge found that the bottom of the hot water heater ruptured as a result of great pressure which built up in the tank. Then, the great explosive force was created when the water in the heater, which was "superheated" to a temperature of above its boiling point of 212o F., instantly "flashed" into steam when freed from the pressured confines of the tank and just as instantly expanded to more than 1,000 times its liquid volume.

The trial judge further found that the fact that an improper valve was in use on the heater was a proximate cause of the explosion. All the experts agreed that the pressure valve which Movible mistakenly placed on the hot water heater was not specifically designed for that use. While the exact cause of the explosion could not be conclusively determined, there is no doubt that had a working temperature pressure relief valve been in place, the accident would have been prevented. The recommended type of valve is designed to relieve excess pressure and temperature, both of which contributed to the explosion of the hot water heater.

On June 6, 1974, the trial judge entered his opinion with respect to liability in the case. He found that there was no negligence (as all parties admit) on the part of Shell Oil Company; he held that Louisiana Civil Code Act 2322 was inapplicable, and he held that certain regulations of the Department of Interior did not create strict liability as against Shell in the plaintiffs favor in this case. In the same opinion Judge Heebe also held that Pacific Employers Insurance Company was negligent through one of its inspectors (Mr. Stansbury) who failed to reinspect Movible's premises after recommending that the relief valve be changed on the water heater which exploded. The trial judge also found that the Texstream Corporation, the manufacturer of the valve, was not liable. Judgment was entered accordingly.

Thereafter, on motion to reconsider his judgment, the trial judge issued another opinion in which he concluded that the inspector for Pacific Employers Insurance Company was not negligent, but that his earlier opinion in all other respects was correct. The court made explicit in this opinion that the cause of the water heater explosion was the negligence of Movible. The net result of this decision, however, is that the plaintiffs recovered nothing. Movible, who was originally a party to the action, had...