Opinion
Civil Action No. 03-1989 Section "L" (4).
August 2, 2004
ORDER REASONS
Before the Court is the Motion of Defendant/Third-party Plaintiff Diamond Offshore Drilling, Inc. ("Diamond") for Summary Judgment on Indemnity Claim. The motion came before the Court with oral argument, following which the Court took the matter under submission. For the following reasons, the Court hereby GRANTS the motion.
I. BACKGROUND
The original Plaintiff, Kurt Lively, was employed by Diversified Well Logging, Inc. ("Diversified") as a mud logging technician and was assigned to perform services on a mobile semi-submersible drilling vessel, the Ocean Saratoga, which was owned by Diamond. On October 11, 2002, the Plaintiff claims that he suffered injuries when he fell down a stairwell.
On October 15, 2003, Diamond filed a third-party complaint against Diversified and its insurer, Gemini Insurance Company ("Gemini"). In its third-party complaint, Diamond alleges that a master service agreement was in effect between it and Diversified at the time of the incident. Diamond argues that the agreement contained an indemnity provision, which obligates Diversified to indemnify and defend Diamond against any claims brought by Diversified or its employees arising out of their employment, regardless of Diamond's negligence. Additionally, according to Diamond, the agreement names Diamond as an additional insured on the relevant policy. Notwithstanding the policy, Diamond claims that Diversified and Gemini have failed to respond to Diamond's demand for defense and indemnity.
The agreement at issue contains a reciprocal indemnification provision which obligates Diversified to defend and indemnify Diamond against any claims brought by Diversified or its employees arising out of their work regardless of Diamond's negligence. Likewise, the contract obligates Diamond to defend and indemnify Diversified against any claims brought by Diamond or its employees arising out of their work regardless of Diversified's negligence. Para. 9, Def.'s Ex. A, Defendant's Motion for Summary Judgment at Rec. Doc. No. 26.
Diversified does not dispute that the agreement contains an indemnity provision. Rather, Diversified argues that the provision is null and void. Diversified makes two arguments. First, Diversified argues that Louisiana law is the applicable law to the case. As such, the indemnity provision is null and void pursuant to the Louisiana Oilfield Anti-Indemnity Act ("LOAIA"), La.R.S. 9:2780. Second, Diversified claims that section 905(b) of the Longshore and Harbor Worker's Compensation Act, 33 U.S.C. § 901, et seq., is applicable to the case as well. Diversified maintains that section 905(b) prohibits enforcement of the indemnity provision.
The Court will address each argument in turn.
II. ANALYSIS
A. Applicable law
The parties do not dispute that the Plaintiff at all relevant times was a non-seaman performing mud logging services aboard a vessel. The parties also do not dispute that the Outer Continental Shelf Lands Act ("OCSLA") applies to this case. 42 U.S.C. § 1331. et seq. The dispute concerns whether, under OCSLA, general maritime or Louisiana law applies. Louisiana law prohibits enforcement of the indemnity provision while the general maritime law allows it.
OCSLA provides comprehensive choice-of-law rules and federal regulation to a broad range of activities occurring beyond the territorial waters of the states on the outer continental shelf of the United States. Relevant to the case at bar, OCSLA "applies federal law to certain structures and devices on the OCS, incorporates state law into federal law on the OCS, and applies the [Longshore Habor Worker's Compensation Act] to certain injuries sustained by persons working on the OCS." Demette v. Falcon Drilling Co., Inc., 280 F.3d 492, 495-96 (5th Cir. 2002).
For state law to apply as a surrogate to federal law, under the OCSLA, the Fifth Circuit requires satisfaction of the following three-part test:
(1) The controversy must arise on a situs covered by the OCSLA (i.e., the subsoil, seabed, or artificial structure 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 the Federal law.Id. at 497 (citing Union Texas Petroleum Corp. v. PLT Engineering, 895 F.2d 1043, 1047 (5th Cir. 1990).
The parties do not dispute the situs at issue is covered by the OCSLA. Thus, the question is whether Federal maritime law applies of its own force in this case. In the Fifth Circuit, if the dispute arises out of a maritime contract, then maritime law is the applicable law, and state law does not apply. Demette, 280 F.3d at 497. Defendant maintains that the contract at issue is a maritime contract, while Plaintiff asserts the contrary.
Whether a contract is maritime or not depends on the "nature of the contract, rather than its place of . . . performance." Davis Sons, Inc., v. Gulf Oil Corp., 919 F.2d 313, 315-16 (5th Cir. 1990). Courts determine the nature of a contract by its historical treatment in the relevant jurisprudence and by an inquiry into the facts surrounding the contract. Id:
The Davis Court outlined six factual factors to consider when characterizing the contract: 1) what does the specific work order in effect at the time of injury provide; 2) what work did the crew assigned under the word 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; and 6) what work was the injured worker actually doing at the time of injury. Davis, 919 F.2d at 316.
Diversified claims that none of the above factors can be met in this case.
A review of the jurisprudence in the Fifth Circuit indicates that a contract to furnish labor to work on special purpose vessels to service oil wells is a maritime contract. In re Elevating Boats, Inc., 2002 WL 272372 (EDLA 2002); Demette, 280 F.3d at 500; See Campbell v. Sonat Offshore Drilling, 979 F.2d 1115, 1120-21 (5th Cir. 1990) (holding that contracts to provide offshore casing services are maritime); Smith v. Penrod Drilling Corp., 960 F.2d 456 (5th Cir. 1992) (holding that contract to "work over" a jack-up rig is maritime); Diamond Offshore Co. v. AB Builders, Inc., 302 F.3d 531, 549 (5th Cir. 2002) (holding that a contract for repair of a jack-up rig is maritime); Dupont v. Sandefer Oil Gas, Inc., 962 F.2d 60, 62 (5th Cir. 1992) (holding that contract to supply and equip vessel was maritime).
Diversified claims that the jurisprudence does not support finding that a contract to provide mud logging services is a maritime contract. Diversified cites Hollier v. Union Texas Petroleum Corporation to support this proposition. Hollier v. Union Texas Petroleum Corp., 972 F.2d 662 (5th Cir. 1992). In Hollier, the Fifth Circuit stated as part of its analysis of the Davis factors: "Hollier was assigned to the well testing crew and performed well testing and some paperwork, neither of which is maritime activity." Id. at 665. Based on the Fifth Circuit's classification of well testing as non-maritime, Diversified asks this Court to find that mud logging is not a maritime activity.
However, as Hollier makes clear, a court's characterization of a contract such as the one at issue is highly factual. In Hollier, the Fifth Circuit went on to explain that a majority of the decedent's work was performed on a fixed platform. This Court finds the case at bar distinguishable on this basis.
In this case, the Plaintiff performed all of his duties upon a vessel over navigable waters. The vessel was engaged in oil drilling operations. Mud logging was an integral part of these operations. Plaintiff's sole duty aboard the vessel was to provide mud logging services. Thus, the work assigned to the Plaintiff was part of the vessel's primary purpose.
Accordingly, the Court finds that the agreement is a maritime contract. Thus, federal maritime law applies of its own force, and state law is inapplicable.
B. APPLICABILITY OF 33 U.S.C. § 905(B)
Diversified next argues that the indemnity agreement is unenforceable under section 905(b) of the Longshore and Harbor Worker's Compensation Act ("LHWCA"). 33 U.S.C. § 901, et seq. As a non-seaman engaged in drilling operations on the Outer Continental Shelf, the Plaintiff is subject to the exclusive remedy of the LHWCA by virtue of 43 U.S.C. § 1333(b) of the OCSLA, rather than 33 U.S.C. § 901, et seq. See Demette, 280 F.3d at 502. The LHWCA creates for covered employees injured aboard a vessel, a cause of action against the vessel (including its owner) on which the employee was working when injured. See 33 U.S.C. § 901, et seq. Section 905(b) of the LHWCA bars employers from indemnifying the vessel from LHWCA liability.
However, when the LHWCA is applicable by virtue of section 1333(b), the third-party remedy against the vessel owner is governed by section 905(c), not 905(b). In such a case, section 905(c) of the LHWCA provides that "any reciprocal indemnity provision" between the vessel and the employer is enforceable. 33 U.S.C. § 905(c); see also Demette, 280 F.3d at 502. Thus, the reciprocal indemnity provision at issue in the case at bar is valid and enforceable. As such, Diamond is entitled to a defense and indemnification as provided under the agreement.
B. Spoliation of Evidence
Diversified also argues that summary judgment regarding indemnification and defense is premature as to the Plaintiff's claim for spoliation alleged in his First Amended Complaint. In response, Diamond notes that any alleged spoliation of evidence would have occurred subsequent to the incident which forms the basis of the Plaintiff's main suit and, as such, constitutes a separate cause of action. Diamond has not sought a ruling relative to the indemnity or defense obligations of Diversified or Gemini on this cause of action. Accordingly, the issue is not properly before the Court.
III. CONCLUSION
Based on the foregoing reasons, the Court finds that Diamond is entitled to indemnity and a defense as provided in the Master Service Agreement. Accordingly, Diamond's Motion for Summary Judgment is hereby GRANTED.