Filed: Jun. 05, 2014
Latest Update: Mar. 02, 2020
Summary: Case: 13-30796 Document: 00512654174 Page: 1 Date Filed: 06/05/2014 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit No. 13-30796 FILED June 5, 2014 Lyle W. Cayce DARNELL DEON BALONEY, Clerk Plaintiff v. ENSCO OFFSHORE COMPANY; STONE ENERGY OFFSHORE, L.L.C., Defendants-Third Party Plaintiffs - Appellees v. BAYOU INSPECTION SERVICES, INCORPORATED, doing business as Bayou Testers, Incorporated, Third Party Defendant - Appellant Appeal from th
Summary: Case: 13-30796 Document: 00512654174 Page: 1 Date Filed: 06/05/2014 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit No. 13-30796 FILED June 5, 2014 Lyle W. Cayce DARNELL DEON BALONEY, Clerk Plaintiff v. ENSCO OFFSHORE COMPANY; STONE ENERGY OFFSHORE, L.L.C., Defendants-Third Party Plaintiffs - Appellees v. BAYOU INSPECTION SERVICES, INCORPORATED, doing business as Bayou Testers, Incorporated, Third Party Defendant - Appellant Appeal from the..
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Case: 13-30796 Document: 00512654174 Page: 1 Date Filed: 06/05/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 13-30796 FILED
June 5, 2014
Lyle W. Cayce
DARNELL DEON BALONEY, Clerk
Plaintiff
v.
ENSCO OFFSHORE COMPANY; STONE ENERGY OFFSHORE, L.L.C.,
Defendants-Third Party Plaintiffs -
Appellees
v.
BAYOU INSPECTION SERVICES, INCORPORATED, doing business as
Bayou Testers, Incorporated,
Third Party Defendant - Appellant
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:11-CV-2730
Before KING, SOUTHWICK, and GRAVES, Circuit Judges.
PER CURIAM:*
This appeal concerns the enforceability of an indemnity clause in a
contract between Bayou Inspection Services, Inc. and Ensco Offshore Co. The
district court determined the indemnity clause was enforceable because it was
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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governed by maritime law which recognizes the enforceability of such clauses,
and not by Louisiana law which does not. We AFFIRM.
FACTS AND PROCEDURAL HISTORY
Darnell Baloney was injured in the Gulf of Mexico while working on the
ENSCO 99, a mobile offshore drilling unit (“MODU”). The ENSCO 99 is a
“jack-up drilling rig” that, after the legs of the floating rig are lowered to the
seabed, is jacked up above the water. The important facts are undisputed.
Ensco Offshore Co. is a drilling company that furnishes MODUs for use in an
offshore environment to energy companies that need its services. Stone Energy
Offshore, LLC, the owner of an offshore lease in the Gulf of Mexico, entered
into an agreement with Ensco in which Ensco would provide offshore well
drilling services on this lease. Pursuant to this agreement, Ensco transported
the ENSCO 99 to Stone’s offshore lease, extended its legs into the floor of the
Gulf of Mexico, and began drilling operations.
Bayou Inspection Services, Inc., performs non-destructive x-ray and
magnetic particle testing on welded surfaces. Ensco and Bayou entered into a
master services agreement (“MSA”) containing various terms that would
govern any future contractual work performed by Bayou for Ensco. This
agreement contemplated that future work orders would detail the specific
tasks to be performed. Bayou agreed in the MSA to defend and indemnify
Ensco against any claims arising from injury to Bayou’s employees in
connection with work performed under the agreement. Bayou also agreed to
carry certain insurance and to name Ensco as an “additional insured” in its
policies. In the MSA, Bayou acknowledged that Ensco “performs its services
under contract with various energy related companies, sometimes referred to
as ‘Operators,’” and agreed “to extend the benefit of [its] indemnification and
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insurance, including additional insured status . . ., to any Operator for whom
[Ensco] may be performing services under written Contract.”
In November 2012, Ensco called in a work order to Bayou for inspection
of welds using x-ray photography and magnetic particle testing. The x-ray
photography was to be used to check welds on drilling pipeline. The magnetic
particle testing was to be used to check welds on the boom of a crane attached
to the ENSCO 99. Baloney and Paul Brummet, both Bayou employees, were
assigned to the ENSCO 99 job. Baloney spent one day aboard the ENSCO 99
performing x-ray testing on pipeline without incident. The following day, he
completed the x-ray testing and began the magnetic testing on the crane. At
the time of his alleged injury, Baloney was inspecting the welds on the boom
of one crane attached to the ENSCO 99 while suspended in a personnel basket
from another crane on the ENSCO 99. The crane operator allegedly caused
the basket to hit the crane’s cable, jerking the basket and injuring Baloney.
Baloney sued Ensco and Stone in federal court to recover for his injuries.
Ensco and Stone both filed third-party complaints against Bayou seeking
defense and indemnification based on the provisions of the MSA. Baloney’s
claims against Stone were dismissed. His remaining claims were eventually
settled, leaving only the contract dispute between Ensco, Stone, and Bayou
remaining. The parties filed cross motions for summary judgment. The
district court granted summary judgment in favor of Ensco and Stone. The
court held that the contract between Ensco and Bayou was a maritime
contract, and that maritime law therefore applied. The court further held that
the contract’s defense and indemnity provisions were enforceable under
maritime law and that Ensco and Stone were contractually entitled to these
benefits. Bayou appeals, arguing that the contract is non-maritime, that
Louisiana law applies, and that the Louisiana Oilfield Indemnity Act renders
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the indemnity provision null and void. Whether the Ensco–Bayou contract is
a maritime contract controls the outcome of this appeal.
DISCUSSION
A district court’s grant of summary judgment is reviewed de novo. Prison
Legal News v. Livingston, 683 F.3d 201, 211 (5th Cir. 2012). Summary
judgment is appropriate when, viewing the evidence in the light most favorable
to the nonmoving party, there is no genuine dispute as to any material fact and
the moving party is entitled to judgment as a matter of law.
Id.
The Outer Continental Shelf Lands Act (“OCSLA”) applies federal law
to “devices” attached to the seabed within the geographical reach of the Act:
The Constitution and laws and civil and political jurisdiction of the
United States are extended to the subsoil and seabed of the outer
Continental Shelf and to all artificial islands, and all installations
and other devices permanently or temporarily attached to the
seabed, which may be erected thereon for the purpose of exploring
for, developing, or producing resources therefrom, . . . to the same
extent as if the outer Continental Shelf were an area of exclusive
Federal jurisdiction located within a State.
43 U.S.C. § 1333(a)(1). A jack-up rig temporarily attached to the Outer
Continental Shelf is a “device” that falls within this statute. Barker v. Hercules
Offshore, Inc., 713 F.3d 208, 213 (5th Cir. 2013).
OCSLA also establishes when laws of adjacent states will apply:
To the extent that they are applicable and not inconsistent with
this subchapter or with other Federal laws and regulations . . ., the
civil and criminal laws of each adjacent State . . . 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. . . .
43 U.S.C. § 1333(a)(2)(A).
As a result of these provisions, state law will apply as surrogate federal
law under OCSLA if these three conditions are met:
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(1) The controversy must arise on a situs covered by OCSLA (i.e.
the subsoil, seabed, or artificial structures permanently or
temporarily attached thereto).
(2) Federal maritime law must not apply of its own force.
(3) The state law must not be inconsistent with Federal law.
Union Tex. Petroleum Co. v. PLT Eng’g, Inc., 895 F.2d 1043, 1047 (5th Cir.
1990). The second condition is the focus of the parties’ dispute. “For disputes
arising out of contracts — including indemnity contracts for offshore drilling
— the courts of this circuit have held that if the contract is a maritime contract,
federal maritime law applies of its own force, and state law does not apply.”
Demette v. Falcon Drilling Co., Inc.,
280 F.3d 492, 497 (5th Cir. 2002),
overruled on other grounds by Grand Isle Shipyard, Inc. v. Seacor Marine, LLC,
589 F.3d 778 (5th Cir. 2009) (en banc). Accordingly, if the contract between
Ensco and Bayou is a maritime contract, maritime law applies to this case.
When deciding whether a contract is maritime in nature, this court first
examines the historical treatment of similar contracts in our jurisprudence,
then considers six fact-specific questions. Davis & Sons, Inc. v. Gulf Oil Corp.,
919 F.2d 313, 316 (5th Cir. 1990). Our historical treatment can make the
subsequent fact-specific inquiry unimportant, but only when the nature of the
contract in question has been clearly answered. Hoda v. Rowan Companies,
Inc.,
419 F.3d 379, 381 (5th Cir. 2005). We will first analyze the history of
contracts such as the one here, then identify and answer the six questions.
A. Historical Treatment of Similar Contracts
The district court briefly surveyed our jurisprudence and determined
that it leaned in favor of finding that Ensco and Bayou had entered into a
maritime contract, but the history was not so clear as to render a fact-specific
inquiry superfluous. As the district court correctly recognized, when it comes
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to determining whether contractual services performed on a jack-up rig have a
sufficiently “salty flavor” such that they are maritime, our precedent has not
established a clear boundary between sea and land. See Hoda, 419 F.3d at
382-83. One of our decisions called this area of the law a “marshland.”
Domingue v. Ocean Drilling and Exploration Co.,
923 F.2d 393, 393-94 (5th
Cir. 1991). Nonetheless, the majority of contractual oil-and-gas-related
services performed on the jack-up rig, especially those services rendered under
contracts for vessel repair, have been deemed maritime because they relate to
the vessel’s overall mission. Diamond Offshore Co. v. A&B Builders, Inc.,
302
F.3d 531, 549 (5th Cir. 2002), overruled on other grounds by Grand
Isle, 589
F.3d at 788.
We agree with the district court, though, that our caselaw is not
definitive. A fact-specific inquiry is needed.
B. Fact-Specific Inquiry
When the historical treatment of similar contracts does not resolve the
issue of whether a maritime contract exists, we consider these six questions:
(1) What does the specific work order in effect at the time of
injury provide?
(2) What work did the crew assigned under the work order
actually do?
(3) Was the crew assigned to work aboard a vessel in navigable
waters?
(4) To what extent did the work being done relate to the mission
of that vessel?
(5) What was the principal work of the injured worker?
(6) What work was the injured worker actually doing at the time
of injury?
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Davis, 919 F.2d at 316. Answers to these questions depend entirely upon the
nature or character of the work performed even when the work is performed in
the Gulf. See
Hoda, 419 F.3d at 381.
The district court considered these questions before determining that the
contract was a maritime one. We start our review by noting that a jack-up rig
is a “vessel.” Campbell v. Sonat Offshore Drilling, Inc., 979 F.2d 1115, 1122-
23 (5th Cir. 1992). Thus, Baloney and the crew were assigned to work aboard
a vessel in navigable waters. The specific work order in effect at the time of
the injury called for weld testing on a recently repaired crane attached to the
vessel. The crew actually did this work, and in fact Baloney was doing this
work at the time he was injured. This work on an appurtenance of the vessel
such as a crane is characterized as “vessel repair services” and is therefore
maritime work. See Diamond
Offshore, 302 F.3d at 549.
The work order also called for weld testing on drilling pipeline, and the
crew actually performed this work before starting the crane work. Because the
record does not precisely explain the nature of the pipeline work, it is not clear
whether it would be considered work on an appurtenance of a vessel. However,
as explained below, it is undoubtedly work on equipment used by a vessel to
carry out its fundamental mission and purpose.
The parties’ dispute on appeal largely concerns the fourth question: Was
the crane and pipeline work performed on the ENSCO 99 related to its
mission? We have already analyzed the nature of a contract that called for
well-casing services to be performed from a jack-up rig. Campbell, 979 F.2d at
1117-18. Such services did not involve any type of repairs or construction on
the rig itself or its appurtenances. The court explained that the rig was not
“be[ing] used as a mere work platform to execute a particular service contract”;
rather, the rig’s equipment, such as its “derrick and draw works,” were
necessary for the casing work.
Id. at 1123. The court concluded that the casing
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work was “‘inextricably intertwined with maritime activities since it required
the use of a vessel and its crew.’” Id. (quoting Davis, 919 F.2d at 317). Ten
years later, a different panel undertook a similar analysis and reached the
same result in a case involving a contract to perform well-casing services from
a jack-up rig. See
Demette 280 F.3d at 494-95. The court stated that “circuit
precedent virtually compels the conclusion that this is a maritime contract.”
Id. at 501.
Similarly, in another appeal we considered a worker who was injured
while tightening nuts on the blowout preventers; we had to resolve whether a
contract that involved installing and changing blowout preventers on a
wellhead was maritime.
Hoda, 419 F.3d at 381. We recognized that “the
torquing services [the contractor] provided pertain solely to oil and gas
development and, in and of themselves, have nothing to do with traditional
maritime activity or commerce.”
Id. at 382. Nevertheless, the court explained
that “the torquing up and torquing down of the blow-out preventer stacks was
but a discrete function in a carefully orchestrated series of actions conducted
by [the drilling company] during the drilling of the well.”
Id. at 383. The court
further expounded that the contractor’s services “were ‘inextricably
intertwined’ with the activity on the rig, were dependent on [the drilling
company’s] placement of the equipment on which [the contractor’s] employees
worked, and could not be performed without the rig’s direct involvement.”
Id.
The court therefore concluded that the torquing “‘is an integral part of drilling,
which is the primary purpose of the vessel.’”
Id. (quoting Demette, 280 F.3d at
501). Accordingly, the court held that the contract was a maritime contract.
The only Fifth Circuit case cited by Bayou that arguably supports the
contrary conclusion is Domingue, 923 F.2d 393. There, the operative contract
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called for wireline services 1 to be performed from a jack-up drilling rig, but the
plaintiff, who was not employed by either contracting party, was injured while
performing well-testing services unrelated to the wireline services. Id. at 394.
It was in this context that we ultimately concluded that the contract was non-
maritime.
Id. at 397-98; see
Campbell, 979 F.2d at 1122. Domingue has little
application here because Baloney was a Bayou employee and was injured
performing services pursuant to Ensco’s work order. Moreover, to the extent
that Bayou relies on Domingue for the suggestion that repair services
performed to aid the vessel’s oil and gas exploration capabilities are incidental
to its mission, Campbell and Hoda directly discussed and held that contract
work aboard a rig in furtherance of oil drilling, particularly when that work is
to repair the vessel’s functionality, is inseparable from the rig’s mission.
Bayou’s attempts to distinguish Campbell and Hoda are unconvincing.
First, Bayou advances the idea that the rig lost its vessel character when
jacked up. Bayou offers no binding authority for this proposition, 2 and our
precedent is to the contrary. The place where the injury occurred is not
dispositive of the maritime inquiry, and we have never looked to whether the
vessel is temporarily anchored to the sea floor to determine the nature of the
work performed. See Hoda, 419 F.3d at 381. More broadly, Bayou argues that
“[b]ecause the work performed by Darnell Baloney did not relate to the
1 “A team performing a wireline operation services partially drilled oil and gas wells
and also gathers geophysical data relevant to production.” 923 F.2d at 394 n.3.
2 Bayou does cite one case, a Louisiana appellate case, containing language suggesting
that a jacked-up vessel in some sense loses its vessel character. Brennan v. Shell Offshore,
Inc., 612 So. 2d 929 (La. App. 1993). In that case, the plaintiff was working as a welder on a
jack-up barge that performed services on wellheads and fixed platforms in the Gulf of Mexico.
Id. at 932-33. The court held that his work was not maritime: “The jackets [the plaintiff]
welded were attached to fixed platforms. The fact that the welding occurred on a jack-up
barge is not determinative. The barge when jacked up was similar to a fixed platform.”
Id.
at 934. However, Brennan is distinguishable in that the contract was not for repairs to a
vessel; rather, the vessel was to be used as a work platform for repairs to fixed structures.
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navigation functions of the Ensco 99, the work, and thus the contract, must be
considered non-maritime.” While this idea has been expressed in the tort law
context, 3 adopting this narrow view of maritime contracts would be a departure
from our precedent, which requires us to look at the vessel’s mission, not
whether the services performed relate to the vessel’s navigation. Cf. Diamond
Offshore, 302 F.3d at 537; 549-50 (finding a maritime contract even though the
contractual work did not relate to the navigation functions or movement of the
rig).
Bayou’s work aboard the ENSCO 99 was integral to the vessel’s primary
purpose. The drilling pipeline which Baloney repaired was indisputably part
of the vessel’s equipment. Further, the crane being repaired by Baloney when
he was injured was correctly deemed to be an appurtenance to the vessel. This
equipment, and in particular the functional crane, was essential to the vessel’s
mission of drilling for oil and gas. The ENSCO 99 was not merely being used
as a platform to perform some work unrelated to the vessel’s mission. See
Domingue, 923 F.2d at 394. Rather, Baloney was injured while performing
repairs that were critical to the fulfillment of the vessel’s mission.
Under the fact-specific Davis inquiry, Baloney was performing work
under a maritime contract, which recognizes the enforceability of indemnity
clauses.
AFFIRMED.
3Bayou’s primary support for this argument is a concurrence in Barker v. Hercules
Offshore, Inc., 713 F.3d 208, 213 (5th Cir. 2013) (Clement, J., concurring). Barker concerned
whether the plaintiff’s tort action was maritime in
nature. 713 F.3d at 217 n.5. Judge
Clement drew a clear line between our tort and contracts cases: “[C]ontract cases with similar
fact patterns are not binding on whether this tort action is maritime in nature, since tort and
contract cases apply different tests to determine whether maritime law applies.”
Id.
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