Tetra Techs., Inc. v. Cont'l Ins. Co., 15–30446.

• Decision Date: 24 February 2016
• Docket Number: No. 15–30446.,15–30446.
• Citation: 814 F.3d 733
• Parties: TETRA TECHNOLOGIES, INCORPORATED; Maritech Resources, Incorporated, Plaintiffs–Appellees v. CONTINENTAL INSURANCE COMPANY, Defendant–Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

814 F.3d 733

TETRA TECHNOLOGIES, INCORPORATED; Maritech Resources, Incorporated, Plaintiffs–Appellees

v.CONTINENTAL INSURANCE COMPANY, Defendant–Appellant.

No. 15–30446.

United States Court of Appeals, Fifth Circuit.

Feb. 24, 2016.

Christopher Leonard Zaunbrecher, Esq. (argued), Briney Foret Corry, Lafayette, LA, for Plaintiffs–Appellees.

Travis Louis Bourgeois (argued), Sidney W. Degan, III, Esq., Attorney, Karl H. Schmid, Esq., Degan, Blanchard & Nash, New Orleans, LA, for Defendant–Appellant.

Before STEWART, Chief Judge, and REAVLEY, and DAVIS, Circuit Judges.

PER CURIAM:

Defendant–Appellant Continental Insurance Co. ("Continental") appeals the district court's final judgment in favor of Plaintiffs–Appellees Tetra Technologies, Inc. ("Tetra") and Maritech Resources, Inc. ("Maritech"), requiring Continental and its co-defendant insured, Vertex Services ("Vertex"), to indemnify them.¹ For the reasons set out below, we affirm in part, reverse in part, and remand.

I. Background

This dispute arises from injuries sustained by a platform worker, Abraham Mayorga, employed by Vertex. Mayorga sued Tetra and Maritech (hereinafter collectively "Tetra" unless separately identified) for personal injury, and Tetra sought indemnity from Vertex and its insurer, Continental, pursuant to certain agreements and an insurance policy. On cross motions for summary judgment, the district court concluded that Tetra is entitled to indemnity from Continental and Vertex. Continental appeals.

A. Facts

Tetra and Vertex entered into a Master Service Agreement (the "MSA"), under which Vertex's employees would perform work for Tetra. The MSA required Vertex to indemnify Tetra for injuries sustained by Vertex's employees while working for Tetra. Pursuant to the MSA, Vertex was also required to list Tetra as an additional insured under its general liability insurance policy issued by Continental (the "Policy").

Tetra entered into an agreement (the "Salvage Plan") with Maritech to salvage a decommissioned oil production platform located at Eugene Island 129 ("EI129"). Tetra retained Vertex to perform at least some aspects of the salvage operation. Mayorga served as a rigger for the project, working from a Tetra-owned barge, the D/B Arapaho. On May 22, 2011, Mayorga was assigned to assist in removing a bridge connecting two sections of the EI129 platform. In his complaint, Mayorga alleged that he was injured when the bridge collapsed, causing him and other workers on it to fall 70–80 feet into the Gulf of Mexico. Mayorga filed suit against Tetra, alleging that it had been negligent in performing the salvage operation.

B. Procedural History

Tetra filed this indemnity action against Vertex and Continental. Tetra and Continental filed cross motions for summary judgment. Continental asserted that it was not required to indemnify Tetra, because (1) the Outer Continental Shelf Lands Act ("OCSLA") made Louisiana law applicable as surrogate federal law; (2) the indemnity agreement was void under the Louisiana Oilfield Indemnity Act ("LOIA"); and (3) in any event, Tetra's claims were excluded under Exclusion d of the Policy. Tetra argued that neither LOIA nor the Policy precluded recovery against Continental or Vertex. On the initial cross motions for summary judgment, the district court found that Continental and Vertex are required to indemnify Tetra because LOIA did not apply and that Exclusion d did not preclude coverage. Continental appealed, but that appeal was dismissed for lack of jurisdiction.

On remand, the parties entered stipulations as to the two issues that prevented resolution of the prior appeal. Tetra also claimed that it was entitled to additional attorneys' fees, while Continental re-urged its motion for summary judgment. The district court denied both Tetra's motion for additional fees (which Tetra does not appeal) and Continental's re-urged motion for summary judgment, entering a final judgment against Continental and Vertex. Continental appeals the grant of summary judgment in favor of Tetra and the denial of its own motion for summary judgment.

II. DISCUSSION

This court "review[s] the district court's judgment on cross motions for summary judgment de novo, addressing each party's motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party."²

Because the dispute in this case stems from events that occurred in the Gulf of Mexico above the outer Continental Shelf ("OCS"), OCSLA applies.³ Under OCSLA, federal law generally applies to such disputes and state law is applied "only as federal law and then only when not inconsistent with applicable federal law."⁴ When there are "gaps in the federal law,"⁵ OCSLA adopts the law of the adjacent state, here Louisiana, as surrogate federal law "[t]o the extent that [the adjacent state's law is] applicable and not inconsistent with [OCSLA] or with other Federal laws and regulations."⁶

OCSLA is important to this dispute because Continental contends that LOIA applies as surrogate federal law and voids the MSA's indemnity agreement. LOIA renders void, under certain conditions relating generally to the petroleum industry, any agreement that purports to indemnify a party for damages resulting from death or bodily injury caused by the indemnitee's own negligence or fault.⁷ If LOIA voids the indemnity agreement, then Tetra is not entitled to indemnity from Continental or Vertex. If LOIA does not void the indemnity agreement, however, then we must determine whether the Continental Policy itself excludes coverage.

Accordingly, we must address three issues: (1) whether OCSLA requires the court to adopt Louisiana law as surrogate federal law; (2) if (or assuming, as did the district court) Louisiana law must be adopted as surrogate federal law, whether LOIA voids the indemnity agreement here; and (3) if LOIA does not void the indemnity agreement, whether the Policy excludes coverage.

A. The Summary Judgment Record Is Inadequate To Determine Whether OCSLA Requires The Adoption Of Louisiana Law As Surrogate Federal Law.

1. Applicable Law

"Under Union Texas Petroleum Corp. v. PLT Engineering, Inc. [ ("PLT ") ], three requirements must be met for state law to apply as surrogate federal law under the OCSLA."⁸ First, "[t]he controversy must arise on a situs covered by OCSLA (i.e., the subsoil, seabed, or artificial structures permanently or temporarily attached thereto)."⁹ Second, "[f]ederal maritime law must not apply of its own force."¹⁰ Third, "[t]he state law must not be inconsistent with Federal law."¹¹

2. We Cannot Determine Whether There Is an OCSLA Situs.

Under the first requirement of the PLT test, "the controversy at issue must arise on an OCSLA situs, namely the seabed, subsoil, and fixed structures of the outer Continental Shelf."¹² When dealing with contractual disputes, this circuit applies a focus-of-the-contract test to determine whether a controversy arises on an OCSLA situs.¹³ Under the focus-of-the-contract test, "a contractual indemnity claim (or any other contractual dispute) arises on an OCSLA situs if a majority of the performance called for under the contract is to be performed on stationary platforms or other OCSLA situses enumerated in 43 U.S.C. § 1333(a)(2)(A)."¹⁴

As this court has discussed, "it is a common practice for companies contracting for work in the oilfield to enter into contracts in two stages," first signing a blanket contract and then "issu[ing] work orders for the performance of specific work."¹⁵ Here, Tetra and Vertex followed this common practice: first entering into the MSA, which functions as a "blanket agreement" between the parties, and then Tetra issuing specific work orders for the completion of particular tasks. In a situation "where the contract consists of two parts, a blanket contract followed by later work order, the two must be interpreted together."¹⁶ But generally, "in determining situs in a contract case such as this, courts should ordinarily look to the location where the work is to be performed pursuant to the specific work order rather than the long term blanket contract."¹⁷

Continental argues that the evidence in the record—namely the MSA, the Salvage Plan, and Mayorga's deposition testimony—establishes that the controversy arose on an OCSLA situs. Continental also asserts that the "entire goal" of the work Tetra hired Vertex to perform was the deconstruction, decommissioning, and salvaging of parts of the platform on the OCS. Tetra counters that there is no record evidence as to where the majority of Vertex's work for Tetra was to be performed but contends that most of the work was to be performed on lift barges and material barges—not on an OCS platform.

Tetra's specific work order to Vertex that resulted in Mayorga's assignment to the job is absent from the record. However, the absence of a specific work order is not fatal to Continental's assertion that the controversy arose on an OCSLA situs.¹⁸ Here, the primary non-contractual evidence was Mayorga's deposition testimony. In his deposition, Mayorga testified that he worked as a rigger for Vertex and that he had been on the barge where the accident occurred for two years. Much of Mayorga's work-specific testimony focused on his actions the night of the accident and does reveal that Mayorga worked extensively on the fixed platform. However, as the district court concluded, it is difficult to extrapolate Mayorga's testimony to determine the scope of the entire work order.

Continental also points to the MSA to show that the controversy arose on an OCSLA situs. However, the terms of the MSA provide little guidance in helping to determine where the majority of the work was to be performed under the contract.

Instead, the MSA merely states that Tetra may "obtain certain services [from Vertex], including but not limited to, inspection, maintenance, fabrication, surveying, diving, repair and/or other general oilfield services." Thus, the MSA does not show that Vertex's...