Taylor v. Fishing Tools, Inc.

• Decision Date: 16 October 1967
• Docket Number: No. 7763.,7763.
• Citation: 274 F. Supp. 666
• Parties: Jonie R. TAYLOR, Plaintiff, v. FISHING TOOLS, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Louisiana

274 F. Supp. 666

Jonie R. TAYLOR, Plaintiff, v. FISHING TOOLS, INC., et al., Defendants.

No. 7763.

United States District Court E. D. Louisiana, New Orleans Division.

October 16, 1967.

Jack C. Benjamin, New Orleans, La., for plaintiff.

Edward de La Garza, New Orleans, La., for Humble Oil & Refining Co.

E. Burt Harris, Joe L. Horne, New Orleans, La., for Fishing Tools, Inc. and Humble Oil & Refining Co.

Joel L. Borrello, New Orleans, La., for Aetna Casualty & Surety Co.

RUBIN, District Judge:

Jonie R. Taylor, an employee of Mayronne Drilling Company (Mayronne), was injured while working on a fixed drilling platform located eight miles off the Louisiana coast. The platform belonged to Humble Oil & Refining Company (Humble) which had engaged Mayronne to drill a well from the platform. Fishing Tools, Inc. (Fishing Tools) had furnished some of the equipment to be used in drilling. Taylor sued Humble and Fishing Tools in admiralty under the general maritime law contending his injuries resulted from the negligence of Fishing Tools and Humble.

Aetna Casualty & Surety Company (Aetna) was the insurer of Mayronne under a policy written in Tampa, Florida, and delivered to Mayronne in New Orleans. Aetna intervened for recovery of compensation benefits paid to Taylor. Humble and Fishing Tools then cross-claimed against Aetna as the liability insurer of Mayronne. Mayronne was not made a party defendant to the cross claim.

Since Aetna's policy contains the usual "no-action" clause, it can be sued directly only if the Louisiana Direct Action Statute (LSA-R.S. 22:655) applies or if its joinder as an intervenor makes it subject to this cross claim. The questions raised bring a chain of interlocking problems into the case. These are separately discussed below.

I. IS THE LOUISIANA DIRECT ACTION STATUTE APPLICABLE TO AN ACCIDENT ON AN OFFSHORE DRILLING PLATFORM?

A. Does federal law make the Louisiana statute applicable?

The Outer Continental Shelf Lands Act, 43 U.S.C.A. § 1333(a) (2), provides that:

"To the extent that they are applicable and not inconsistent with this subchapter or with other Federal laws and regulations of the Secretary now in effect or hereafter adopted, the civil and criminal laws of each adjacent State as of August 7, 1953 are declared to be the law of the United States for that portion of the subsoil and seabed of the outer Continental Shelf, and artificial islands and fixed structures erected thereon, which would be within the area of the State if its boundaries were extended seaward to the outer margin of the outer Continental Shelf * * *."

The Court of Appeals for the Fifth Circuit held in Pure Oil Company v. Snipes, 1961, 293 F.2d 60, that Louisiana tort law was not applicable to accidents occurring on offshore drilling platforms. This decision was recently reviewed and reaffirmed in Loffland Bros. Co. v. Roberts, 5 Cir., 1967. A similar result was reached in Ocean Drilling & Exploration Company v. Berry Bros., Inc., 5 Cir., 1967, 377 F.2d 511, in which the Court said in footnote 4:

"It is clear that federal maritime law, not that of Louisiana or any other state, controls this controversy over whether a repair contractor owed indemnity to the owner of a stationary offshore platform."

However, this does not necessarily dispose of the question here. For the direct action against Aetna is brought as a consequence of Louisiana insurance law, not Louisiana tort or compensation law.¹ Even if the Direct Action Statute is applied in this case, this action can be and should be governed by exactly the same federal principles with respect to liability and defenses that would be applied if the action had been brought against Mayronne. To permit the insurer to be joined in such an action does not create a situation "inconsistent with the Outer Continental Shelf Lands Act or with other Federal laws and regulations * * *." 43 U.S.C.A. § 1333 (a) (2). As the Fifth Circuit Court of Appeals observed in Cushing v. Maryland Casualty Company, 1952, 198 F.2d 536, 539:

"While Sec. 665 * * * confers upon an injured party a substantive right which becomes vested at the moment of the injury, it is not a right essentially maritime in character, nor one peculiar to admiralty or maritime jurisdiction, but is one which applies alike to all contracts of public liability insurance, regardless of whether the injury occurs ashore or afloat. There is nothing in it which undertakes to change the substantive admiralty law, nor does it undertake to deal with a remedy in courts of admiralty. The statute provides only an additional and cumulative remedy at law in the enforcement of obligations of indemnity voluntarily and lawfully assumed by the insurer. Thus the statute does not conflict with any feature of substantive admiralty law, nor with any remedy peculiar to admiralty jurisdiction. These suits are at law, not in admiralty."

* * * * * *

"To permit such an action will not defeat the purpose of the federal limitation of liability statute, nor will it interfere with the harmony or uniformity of admiralty law or its international or interstate relations."

Indeed it has been held that the insurer may be sued directly in actions based on the Jones Act and general maritime law. Lovless v. Employers' Liability Assurance Corp., 5 Cir., 1955, 218 F.2d 714; Cushing v. Maryland Casualty Company, 5 Cir., 1952, 198 F.2d 536, vacated in Maryland Casualty Company v. Cushing, 1954, 347 U.S. 409, 74 S.Ct. 608, 98 L.Ed. 806, involving a limitation proceeding; Alcoa SS Co. v. C. Ferran & Co., Inc., 5 Cir., 1967, 383 F.2d 46, involving a libel against a ship repair contractor and its underwriter for negligence in making repairs; and In re Independent Towing Co., E.D.La., 1965, 242 F.Supp. 950, 956, involving a limitation proceeding.

There is even more reason to apply the state insurance statute here. It permits adjudication of all of the claims resulting from a single event in one proceeding. Moreover, it enables the court which has jurisdiction of the basic action and which is most familiar with the substantive rules regarding recovery to deal with the related claims. Thus, application of the statute not only comes within the language of the Outer Continental Shelf Lands Act, but it is also consonant with sound practices of judicial economy and competence.²

B. Is the Louisiana Direct Action Statute applicable according to its terms?

1. Effect of the Place Where the Accident Occurred.

It is urged that the Louisiana Direct Action Statute, by its own terms, applies only if "the accident or injury occurred within the State of Louisiana." From a review of the history of the enactment of that phrase and the purposes of the statute, the Court concludes that the language of the statute does not prevent its application to an injury occurring outside of Louisiana on a platform erected upon the seabed of the Outer Continental Shelf.

Prior to 1950, the language of the Direct Action Statute was as follows:

"No policy or contract of liability insurance shall be issued or delivered in this state, unless it contains provisions to the effect that the insolvency or bankruptcy of the insured, shall not release the insurer from the payment of damages for injuries sustained or loss occasioned during the existence of the policy, and any judgment which may be rendered against the insured for which the insurer is liable which shall have become executory, shall be deemed prima facie evidence of the insolvency of the insured, and an action may thereafter be maintained within the terms and limits of the policy by the injured person or his or her heirs against the insurer. The injured person or his or her heirs, at their option, shall have a right of direct action against the insurer within the terms and limits of the policy in the parish where the accident or injury occurred or in the parish where the insured has his domicile, and said action may be brought against the insurer alone or against both the insured and the insurer, jointly and in solido. Nothing contained in this section shall be construed to affect the provisions of the policy or contract if the same are not in violation of the laws of this state. It is the intent of this Section that any action brought hereunder shall be subject to all of the lawful conditions of the policy or contract and the defenses which could be urged by the insurer to a direct action brought by the insured, provided the terms and conditions of such policy or contract are not in violation of the laws of this state."

This was the text adopted by Act 195 of 1948.

A prior Louisiana statute, Act 55 of 1930, had been interpreted as applying to policies issued in Louisiana no matter where the accident occurred. Hudson v. Georgia Casualty Co., 1932, W.D.La., 57 F.2d 757, 759. It had likewise been interpreted as applying to policies issued and delivered in another state if the accident occurred in Louisiana. Stephenson v. List Laundry and Dry Cleaners, Inc., 1935, 182 La. 383, 162 So. 19. In 1950, Judge J. Skelly Wright held that in replacing Act 55 of 1930 with Act 195 of 1948 the legislature intended to limit the Direct Action Statute to policies issued in Louisiana. Belanger v. Great American Indemnity Company, E.D.La., 1950, 89 F.Supp. 736.³ The Louisiana legislature convened shortly after the Belanger decision and amended the statute by Act 541 of 1950 so as to add the following sentence:

"This right of direct action shall exist whether the policy of insurance sued upon was written or delivered in the State of Louisiana or not and whether or not such policy contains a provision forbidding such direct action, provided the accident or injury occurred within the State of Louisiana."

It was generally thought that the purpose of this amendment was to overturn the result in Belanger and to make clear that the statute reached policies issued or delivered outside of Louisiana.⁴

However, the Louisiana legislature could not...