Crescent Energy Servs., L.L.C. v. Carrizo Oil & Gas, Inc. (In Re Crescent Energy Servs., L.L.C.) , 896 F.3d 350 ( 2018 )

Case: 16-31214 Document: 00514554790 Page: 1 Date Filed: 07/13/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
July 13, 2018
No. 16-31214 Lyle W. Cayce
Clerk
In re: In the Matter of the Complaint of Crescent Energy Services, L.L.C.,
Owner and Operator of the S/B OB 808, for Exoneration from or Limitation of
Liability
CRESCENT ENERGY SERVICES, L.L.C., as Owner and Operator of the S/B
OB 808, for Exoneration from or Limitation of Liability
Petitioner-Appellant
v.
CARRIZO OIL & GAS, INCORPORATED,
Third Party Plaintiff - Appellee
v.
LIBERTY MUTUAL INSURANCE COMPANY, doing business as Liberty
International Underwriters; STARR INDEMNITY & LIABILITY COMPANY,
Third Party Defendants - Appellants
Appeals from the United States District Court
for the Eastern District of Louisiana
Before HIGGINBOTHAM, SOUTHWICK, and COSTA, Circuit Judges.
LESLIE H. SOUTHWICK, Circuit Judge:
Case: 16-31214 Document: 00514554790 Page: 2 Date Filed: 07/13/2018
No. 16-31214
This appeal poses the question of whether a particular contract to plug
and abandon three offshore oil wells is a maritime contract. The answer
matters because it determines where to place financial liability for injuries to
an employee of the contractor performing the work. Complicating the appeal
is that after the district court ruled, this court altered the several decades-old
test for determining whether such contracts were maritime or not. Applying
the new test to the facts that are not in dispute in this record, we AFFIRM.
FACTUAL AND PROCEDURAL BACKGROUND
In 2015, Carrizo Oil & Gas, Incorporated, needed a contractor to plug
and abandon three no longer producing wells located on small fixed platforms
in coastal waters of Lafourche Parish, Louisiana. State law obligated Carrizo
to decommission these wells. The parties, and so will we, refer to this activity
as plugging and abandoning the wells, or “P&A work.” We once described such
work this way: “Cement plugs are inserted into the wells beneath the ocean
floor and the casing pipe is removed.” St. Romain v. Indus. Fabrication &
Repair Serv., Inc., 203 F.3d 376, 378 (5th Cir. 2000). 1
Crescent Energy Services, LLC, an oil and gas industry contractor,
submitted a bid for the work. In the bid letter, Crescent noted that the
equipment it would use included the “5K P&A Equipment Package,” “5K Sand
Cutting Casing Cutter Package,” a five-person crew to perform the P&A work,
1The parties’ briefing has given little attention to whether Crescent was contractually tasked
with removal of the fixed platforms themselves. Federal law requires removal to complete
the decommissioning of a well on the Outer Continental Shelf. See Cutting Underwater
Techs. USA, Inc. v. Eni U.S. Operating Co., 671 F.3d 512, 519 (5th Cir. 2010). As to rules
applicable to Louisiana’s territorial waters, Carrizo refers us to state regulations which
require operators to provide financial security for the eventual “site restoration” of plugged
and abandoned wells. See LA. ADMIN. CODE tit. 43 XIX, § 104A (2017). Crescent’s insurers
cite Section 311 of Part IX of those regulations, which seem to require the removal of a
production platform. Whether it was Crescent’s chore would depend on the contract.
Dismantling and salvaging the platform is not among the 13 tasks identified on a document
entitled “P&A Procedure” discussed by both parties.
2
Case: 16-31214 Document: 00514554790 Page: 3 Date Filed: 07/13/2018
No. 16-31214
and three vessels. The vessels included a quarters barge with a thirty-foot long
crane, called the “OB 808”; a tug boat named the “SLYE JOSEPH”; and a cargo
barge. The OB 808 was a barge that could operate in shallow water where its
spuds or footings would be anchored in the mud to create a stable platform.
The OB 808 provided living quarters for the crew and operated as an additional
platform for the P&A operations. The OB 808 spud barge required use of a tug
boat because the barge was not motorized, and Crescent contracted with
another entity for use of the SLYE JOSEPH.
Carrizo accepted Crescent’s bid to plug and abandon the three wells,
forming an agreement that we will refer to, because the parties do, as the
Turnkey Bid. Those two companies already had an ongoing relationship under
a Master Service Agreement, which provides general terms applicable to
contracts between the parties “for the performance of work or the provision of
services.” Included were several paragraphs describing Crescent’s obligation
to indemnify Carrizo against any claims for bodily injury, death, or damage to
property. The Turnkey Bid and the Master Service Agreement together formed
Carrizo and Crescent’s contract. A document detailing the P&A work breaks
the tasks into thirteen steps.
On February 13, 2015, Crescent’s employee Corday Shoulder was
severely injured. Shoulder, a pump operator, was sitting on the fixed platform
when he was injured. The district court described the event this way:
Before the accident, Shoulder attached a piece of pipe to Carrizo’s
well and screwed the pipe into a flange. When Shoulder began
releasing pressure from the well, the pipe separated from the
flange, severely injuring Shoulder’s leg.
In March 2015, Crescent filed a limitation of liability action in the United
States District Court for the Eastern District of Louisiana. The suit was
brought under Federal Rule of Civil Procedure 9(h) and Rule F of the
Supplemental Rules for Admiralty and Maritime Claims, the latter rule
3
Case: 16-31214 Document: 00514554790 Page: 4 Date Filed: 07/13/2018
No. 16-31214
specifically governing maritime limitation of liability actions. Crescent
asserted the seaworthiness of its vessel and its proper operation, disclaimed
any negligence, identified the value of the vessel and offered security in that
amount to the court, sought to require all who had claims arising out of the
accident to file them in this suit, requested the enjoining of prosecution of
claims elsewhere, and demanded exoneration from liability.
Carrizo in its answer rejected that Crescent had brought a valid
limitation of liability action. It claimed the benefit of the insurance applicable
to the incident, and also identified Crescent’s agreement to indemnify it for
claims such as these. Crescent and its insurers would deny that indemnity
was owed despite the contractual language, arguing that Louisiana’s Oilfield
Anti-Indemnity Act applied. See LA. STAT. ANN. § 9:2780. As relevant here,
that Act voids an agreement in a contract involving “a well for oil, gas, or
water” which would require a contractor to indemnify its principal from the
latter’s own fault in causing death or bodily injury. Id.
Shoulder and Carrizo both filed claims along with their answers. Carrizo
also filed claims against four companies that it alleged were Crescent’s
insurers. Of those, Liberty Mutual Insurance Company and Starr Indemnity
& Liability Company are the only appellants here. Pursuant to an agreement
with Carrizo, Crescent has been dismissed from the case. When referring
collectively to the only appellants, we label them “Crescent’s insurers.”
The parties all filed for summary judgment. The district court granted
Carrizo’s motion and denied the others. The court relied on the provision in
the Master Service Agreement in which Crescent agreed to indemnify Carrizo
for injuries to Crescent employees. The court held that indemnification was
enforceable against Crescent because the parties had entered a maritime
contract. Such a contract made federal maritime law applicable and precluded
4
Case: 16-31214 Document: 00514554790 Page: 5 Date Filed: 07/13/2018
No. 16-31214
application of the Louisiana Oilfield Anti-Indemnity Act. Crescent’s insurers
timely appealed.
DISCUSSION
We have either one or two issues to resolve. We know we must determine
whether the relevant collection of agreements constitutes a maritime contract.
If so, general maritime law applies, and the indemnity provision in the contract
is enforceable.
We are also urged by Crescent’s insurers to decide an issue that was not
presented to the district court. That issue arises only if the contract in question
is a maritime one. We start with that issue, then turn to whether this is a
maritime contract.
A. Inherently local disputes
The Supreme Court, in a decision central to our resolution of whether
the contract in question was a maritime one, observed preliminarily that even
when maritime law would otherwise apply, some disputes could be inherently
local and maritime law could be displaced:
For not ‘‘every term in every maritime contract can only be
controlled by some federally defined admiralty rule.’’ Wilburn Boat
Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310, 313, 75 S. Ct. 368, 99
L. Ed. 337 (1955) (applying state law to maritime contract for
marine insurance because of state regulatory power over insurance
industry). A maritime contract’s interpretation may so implicate
local interests as to beckon interpretation by state law.
Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 27 (2004). The Court stated that no
specific local interest had been identified by the party seeking application of
this rule. Id. Moreover, “when state interests cannot be accommodated
without defeating a federal interest, as is the case here, then federal
substantive law should govern.” Id. (emphasis added).
5
Case: 16-31214 Document: 00514554790 Page: 6 Date Filed: 07/13/2018
No. 16-31214
Thus, there are two requirements for what is being argued: (1) the
contract in question is a maritime one, and (2) the dispute is so inherently local
as to cause application of state law. That is the law Crescent’s insurers want
us to apply, despite their otherwise vigorous contention that the lawsuit does
not concern a maritime contract. They acknowledge that the first time this
issue was raised was in their opening brief on appeal. We generally consider
waived any issue not first presented to the district court. Tex. Commercial
Energy v. TXU Energy, Inc., 413 F.3d 503, 510 (5th Cir. 2005). This inherently-
local-dispute issue certainly is a candidate for waiver.
Crescent’s insurers, though, point us to opinions where we have held that
“when a question is one of pure law, and when refusal to consider it will lead
to an incorrect result or a miscarriage of justice, appellate courts are inclined
to consider questions first raised on appeal.” Murray v. Anthony Bertucci
Constr., 958 F.2d 127, 128 (5th Cir. 1992) (quoting Nilsen v. City of Moss Point,
674 F.2d 379, 387 n.13 (5th Cir. 1982), rev’d en banc on other grounds, 701 F.2d
556 (5th Cir. 1983)). Further, our authority to consider late-breaking legal
arguments has been recognized by the Supreme Court, which “characterized
the matter of what issues a court of appeals may consider for the first time on
appeal as ‘one left primarily to the discretion of the courts of appeals, to be
exercised on the facts of the individual cases.’” Id. (quoting Singleton v. Wulff,
428 U.S. 106, 121 (1976)).
The usual procedural rule that all issues must first be presented to the
district court, leaving us to review that court’s determinations, is an efficient
approach that allows a full consideration of all the parties’ arguments in the
district court. That is true even for purely legal arguments. A thorough ruling
might avoid an appeal by making clearer the unlikelihood of appellate success
based on the strengths of the district court decision. A clear reason to deviate
6
Case: 16-31214 Document: 00514554790 Page: 7 Date Filed: 07/13/2018
No. 16-31214
from the rule should be shown. We see no excuse for the late introduction of
this issue. It is true that we altered some of the controlling law since the
district court’s ruling with our en banc decision in In re Larry Doiron, Inc., 879
F.3d 568 (5th Cir. 2018). Nothing in that decision, though, affected the
applicability of the issue tardily raised by Crescent’s insurers.
Finally, it is doubtful this issue would alter the outcome of the case. In
Kirby itself, the Court held both that no local interest had been identified but
had a state interest been described, it “cannot be accommodated without
defeating a federal interest,” thus leaving maritime law in place. Kirby, 543
U.S. at 27. The federal interest is “for the uniform meaning of maritime
contracts,” which applies here as much as it did in Kirby. Id. at 28. If the
contract here is maritime, the fact that it was to be performed in the territorial
waters of Louisiana does not justify causing the outcome of this lawsuit to be
different than if the contract was for work on the high seas. Consistency and
predictability are hard enough to come by in maritime jurisprudence, but we
at least should not intentionally create distortions. We do not exercise our
discretion to consider this issue.
B. Maritime contracts
Thus, we do have only one issue to decide: did Crescent and Carrizo enter
into a maritime contract? If the contract between Carrizo and Crescent is a
maritime one, federal law applies and Louisiana’s bar to indemnity provisions
is inapplicable. The district court determined when granting summary
judgment that the contract was maritime. Our review of the ruling is de novo.
James v. State Farm Mut. Auto. Ins. Co., 743 F.3d 65, 68 (5th Cir. 2014).
Summary judgment is appropriate when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” FED.
7
Case: 16-31214 Document: 00514554790 Page: 8 Date Filed: 07/13/2018
No. 16-31214
R. CIV. P. 56(a). The facts and evidence are viewed in the light most favorable
to the nonmovant. James, 743 F.3d at 68.
This circuit has dealt particularly extensively with issues that arise in
determining whether a contract applicable to offshore oil and gas exploration
should be categorized as maritime. Recently, we concluded that a test we had
created in 1990 for resolving those questions focused on incidentals that were
not altogether relevant to the determination. Removing some clutter, our en
banc opinion simplified the mission of identifying such contracts. We now only
ask: (1) “is the contract one to provide services to facilitate the drilling or
production of oil and gas on navigable waters?” and (2) “does the contract
provide or do the parties expect that a vessel will play a substantial role in the
completion of the contract?” Doiron, 879 F.3d at 576 (revising the test
announced in Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313 (5th Cir.
1990)). An affirmative answer to both questions is necessary before the label
“maritime” may be applied to the contract. Id.
Significant parts of our prior law were explicitly unchanged. For
example, ‘‘[o]il and gas drilling on navigable waters aboard a vessel is
recognized to be maritime commerce.’’ Id. at 575 (quoting Theriot v. Bay
Drilling Corp., 783 F.2d 527, 538–39 (5th Cir. 1986)). Caselaw cited by
Crescent’s insurers also remains in place, namely, that maritime law generally
does not extend to events that are confined to fixed platforms, as those
structures are not vessels. See Rodrigue v. Aetna Cas. & Sur. Co., 395 U.S.
352, 360 (1969). From such caselaw, the insurers argue that the accident here,
which occurred on the fixed platform that was being decommissioned and not
on one of Crescent’s vessels, is not covered by maritime law.
Using our de novo review standard, we now apply Doiron to these facts.
8
Case: 16-31214 Document: 00514554790 Page: 9 Date Filed: 07/13/2018
No. 16-31214
1. Was this a contract to provide services to facilitate the drilling or
production of oil and gas on navigable waters?
The Doiron test focuses the court on two separate questions: does the
contract concern “the drilling and production of oil and gas on navigable
waters,” and if so, will the work be performed “from a vessel”? Doiron, 879
F.3d at 575. We start with whether the activity concerns development of oil
and gas offshore. In its post-Doiron supplemental brief, Crescent’s insurers
raise two arguments under this factor. First, the contract did not facilitate the
drilling or production of oil and gas because decommissioning oil wells is more
analogous to construction of offshore platforms, which they say is not maritime
activity. Second, the services were not on “navigable waters” because the
decommissioning work occurred from the fixed platform itself. In response,
Carrizo argues its contract with Crescent does qualify because plugging and
abandoning oil wells is “part of the total life cycle of oil and gas drilling.”
The life-cycle characterization draws in part from the fact that Louisiana
requires site restoration when an oil or gas well is to be abandoned. See LA.
STAT. ANN. § 30:4, et seq. To obtain an initial permit to drill, an applicant must
provide financial security. Id. § 30:4.3A. The financial security will only be
released “after plugging and abandonment and associated site restoration is
completed and inspection thereof indicates compliance with applicable
regulations or upon transfer of such well to another operator.” LA. ADMIN.
CODE tit. 43 XIX, § 104F (2017). It is fair to say that state law regulates the
exploration for and production of oil and gas starting from the initial
exploratory drilling in a likely location, through production when the
exploration is successful, until the process ends by plugging and abandoning
the well and removing such structures as state law requires. We conclude this
contract for P&A work involved the drilling and production of oil and gas.
9
Case: 16-31214 Document: 00514554790 Page: 10 Date Filed: 07/13/2018
No. 16-31214
Crescent’s insurers next argue that the plugging and abandoning work
did not occur on “navigable waters.” The focus is on caselaw concerning events
that are confined to fixed offshore platforms and similar locations: “Admiralty
jurisdiction has not been construed to extend to accidents on piers, jetties,
bridges, or even ramps or railways running into the sea.” See Rodrigue, 395
U.S. at 360. Liberty Mutual argues that similarly, the fixed platform on which
Corday Shoulder was injured in this case was not on “navigable waters.”
It is true that where Shoulder was located when injured would have been
relevant under the Davis test, which inquired what the worker was doing when
injured. See Davis, 919 F.2d at 316. Doiron rejected that concern: “The facts
surrounding the accident are relevant to whether the worker was injured in a
maritime tort, but they are immaterial in determining whether the worker’s
employer entered into a maritime contract.” Doiron, 879 F.3d at 573–74. We
are no longer concerned about whether the worker was on a platform or vessel.
The question is whether this contract concerned the drilling and production of
oil and gas on navigable waters from a vessel. All parties acknowledge that
the wells were located within the territorial inland waters of Louisiana and
that the vessels involved in this contract were able to navigate to them.
We conclude that the contract between Crescent and Carrizo was to
facilitate the drilling or production of oil and gas on navigable waters.
Before turning to the second factor in the Doiron test, we examine
Crescent’s insurers’ argument that Doiron must be read in conjunction with
other law that was not even discussed in that decision. The insurers seek to
place barriers to contain Doiron’s effluence by deploying precedents involving
the construction or deconstruction of an offshore, fixed platform from which oil
and gas wells are drilled, or of related devices attached to the sea floor. See
Petrobas Am., Inc. v. Vicinay Cadenas, S.A., 815 F.3d 211 (5th Cir.), order
10
Case: 16-31214 Document: 00514554790 Page: 11 Date Filed: 07/13/2018
No. 16-31214
clarified on reh’g, 829 F.3d 770 (5th Cir. 2016); Texaco Exp. & Prod. v. Amclyde
Engineered Prod., 448 F.3d 760 (5th Cir.), amended on reh’g, 453 F.3d 652 (5th
Cir. 2006); Union Texas Petroleum Corp. v. PLT Eng’g, Inc., 895 F.2d 1043 (5th
Cir. 1990); Laredo Offshore Constructors, Inc. v. Hunt Oil Co., 754 F.2d 1223
(5th Cir. 1985). Those cases support that torts occurring on and during the
construction of fixed, offshore platforms for the drilling and production of oil
and gas on the Outer Continental Shelf are generally not governed by maritime
law. See, e.g., Texaco, 448 F.3d at 771.
The analysis comes at least in part from a Supreme Court decision
involving a worker who fell from a derrick to the fixed, offshore platform’s floor.
See Rodrigue, 395 U.S. at 353. A second worker in a companion case decided
in the same opinion died when the platform crane he was operating collapsed,
causing him to fall onto the deck of an adjacent barge. Id.
A recent melding of both Davis and one of the cases from the Crescent
insurers’ preferred collection is Tetra Tech., Inc. v. Continental Ins. Co., 814
F.3d 733 (5th Cir. 2016). The broader question was whether under the Outer
Continental Shelf Lands Act’s (“OCSLA”) requirements, the court was to apply
Louisiana law as surrogate federal law. Id. at 738. A subordinate question
was whether federal law, i.e., maritime law, applied of its own force. Id. (citing
PLT, 895 F.2d at 1047). The subject matter of the contract was the salvaging
of a decommissioned well’s platform on the Outer Continental Shelf. Id. at
740–42. As the court explained, the contract in question, which unfortunately
was not in the record, contained obligations both for work on the fixed platform
and on vessels. Id. at 739–40. Without knowing the details of the contract, we
could not complete our analysis of the six factors of the then-relevant Davis
test. Id. at 741.
11
Case: 16-31214 Document: 00514554790 Page: 12 Date Filed: 07/13/2018
No. 16-31214
Despite that the analysis was necessarily stunted, we find its
progression to be helpful. It said there were two steps in deciding whether
maritime law applied of its own accord: (1) identifying the historical treatment
of contracts such as the one at issue, and (2) applying the six Davis factors. Id.
at 740 (citing ACE Am. Ins. Co. v. M–I, LLC, 699 F.3d 826, 832 (5th Cir. 2012)).
Yes, the Tetra court said, as the insurers argue here, contracts for
“decommissioning, deconstructing, or salvaging a fixed platform used for oil
and gas exploration on the [Outer Continental Shelf] . . . are not ‘historically
treated’ as maritime contracts, and maritime law thus generally would not
apply of its own force.” Id. at 741. 2 That general law was not conclusive on
the overall issue, though, because also relevant was the parties’ specific
contract applicable to that specific dispute. A detailed understanding was
needed of the relative scope of the work on the fixed platform and from vessels,
which the evidence on appeal did not allow the court to discern; thus, summary
judgment was improper. Id. at 741–42.
We are not concerned here with those OCSLA issues of whether to
borrow state law as surrogate federal law, which leads to analyzing whether
maritime law applies of its own force, which requires determining the
historical treatment of certain contracts. We do need to analyze, though,
whether this is a maritime contract. Doiron now controls that endeavor.
We may not eliminate all doubt with a citation to learned commentary,
but we conclude this issue by taking note of a comprehensive but unhappy
article analyzing Fifth Circuit maritime law. Professor David Robertson
2The historical treatment can be seen from the following. OCSLA gives jurisdiction to federal
courts over claims arising from the development of minerals on the OCS. Texaco, 448 F.3d
at 768. As to fixed platforms there, the Supreme Court held that “accidents on these
structures, which under maritime principles would be no more under maritime jurisdiction
than accidents on a wharf located above navigable waters, were not changed in character by
the [OCSLA].” Rodrigue, 395 U.S. at 366. Thus, accidents on fixed platforms on the OCS are
not generally matters for maritime law.
12
Case: 16-31214 Document: 00514554790 Page: 13 Date Filed: 07/13/2018
No. 16-31214
discussed three of the cases Crescent’s insurers are arguing are the
appropriate ones to apply here. David W. Robertson, The Outer Continental
Shelf Lands Act’s Provisions on Jurisdiction, Remedies, and Choice of Law:
Correcting the Fifth Circuit’s Mistakes, 38 J. MAR. L. & COM. 487, 541–42
(PLT), 562–64 (Texaco), 566 (Laredo) (2007). In Doiron, we cited the article as
being helpful in our revisions to Davis. Doiron, 879 F.3d at 572 n.20. The
author also discussed the Davis opinion, expressed his disagreement with the
need for most of the six elements of the Davis test, but never hinted there was
an inconsistency between cases relying on Rodrigue and cases using Davis to
classify contracts as maritime or not. Robertson, supra, at 542–49.
Professor Robertson described the purposes of Davis in a more limited
way than would this court, but it is the purpose relevant to this case:
The OCS [Outer Continental Shelf] oil patch is latticed with
contracts and subcontracts. Litigation arising from injuries to OCS
workers ordinarily entails claims for contractual indemnity among
the putative tortfeasors. Whether a contract calling for indemnity
is maritime or not is a recurrently dispositive question. “[I]f the
contract is a maritime contract, federal maritime law applies of its
own force, and state law does not apply.” If the contract calling for
indemnity is not a maritime contract, the governing law will be
adjacent-state law made surrogate federal law by OCSLA
§ 1333(a)(2)(A). Very often the applicable adjacent-state law will
be that of Texas or Louisiana.
Both Texas and Louisiana have anti-indemnity statutes that
will invalidate most indemnity contracts. Federal maritime law,
on the other hand, shows no hostility to indemnity agreements[.]
...
The Fifth Circuit regularly complains about how difficult it
is to tell whether an OCS indemnity contract is maritime. In Davis
& Sons, Inc. v. Gulf Oil Corp. Judge Rubin made a heroic effort to
synthesize the circuit’s jurisprudence into something that made
sense . . . .
13
Case: 16-31214 Document: 00514554790 Page: 14 Date Filed: 07/13/2018
No. 16-31214
Id. at 542–43 (footnotes omitted). The good professor concluded that despite
being heroic, the effort in Davis failed. The en banc court in Doiron, after 25-
plus years of applying Davis, at least agreed that a change was due.
This reference to a scholarly effort to organize the caselaw is to show that
Davis previously and Doiron now are performing the task of determining how
to classify contracts. That classification has often been employed to determine
whether indemnity provisions are enforceable but is not so limited. Our
analysis in the past under Davis was consistent with the caselaw cited to us by
Crescent’s insurers. Consistent now is our application of Doiron.
Finally, regardless of what other Fifth Circuit caselaw there may be,
nothing in such caselaw detracts from the clarity of our 2018 en banc decision
in Doiron. We are here classifying a contract for a certain purpose, a judicial
activity that has been done consistently with the 1969 Rodrigue decision at
least since our 1990 Davis decision. We en banc eliminated most of the factors,
narrowing our focus, but we did not fundamentally change the task. Doiron is
the law we must apply.
2. Does the contract provide or do the parties expect that a vessel will play
a substantial role in the completion of the contract?
We now examine whether the Crescent-Carrizo contract contemplated
that a vessel would play a substantial role in the performance of the contract.
Among the directions given by Doiron on what “substantial” means is that if
“work is performed in part on a vessel and in part on a platform or on land, we
should consider not only time spent on the vessel but also the relative
importance and value of the vessel-based work to completing the contract.”
Doiron, 879 F.3d at 576 n.47. We quoted part of the Supreme Court’s Kirby
discussion, from which the word “substantial” was taken: “Conceptually, so
long as a bill of lading requires substantial carriage of goods by sea, its purpose
14
Case: 16-31214 Document: 00514554790 Page: 15 Date Filed: 07/13/2018
No. 16-31214
is to effectuate maritime commerce – and thus it is a maritime contract.” Id.
at 576 (emphasis added) (quoting Kirby, 543 U.S. at 27). We also draw from
our Doiron discussion a “rule of thumb” used in Jones Act cases:
A worker who spends less than about 30 percent of his time in the
service of a vessel in navigation should not qualify as a seaman
under the Jones Act. This figure of course serves as no more than
a guideline established by years of experience, and departure from
it will certainly be justified in appropriate cases.
Id. at 576 n.47 (quoting Chandris, Inc. v. Latsis, 515 U.S. 347, 371 (1995)). The
court also declared that any determination of the significance of the vessel
“would not include transportation to and from the job site.” Id.
The Crescent insurers argue that measuring the anticipated use of the
vessel should follow OCSLA caselaw where, for purposes of deciding the situs
of the controversy, we are to consider where the majority of work was
performed under “the focus-of-the-contract test.” Grand Isle Shipyard, Inc. v.
Seacor Marine, LLC, 589 F.3d 778, 781 (5th Cir. 2009) (en banc). We do not
see the usefulness of that law to our task. Doiron did not hold that to be a
maritime contract, the parties must have contemplated that a vessel will be
used for a majority of the work. Such a rule would be inconsistent with the
explicit suggestion in Doiron that “substantial” can mean 30 percent,
considerably less than a majority.
We must remember that the contracting parties’ expectations are
central. It was not enough in Doiron that a vessel ultimately had a key role in
the completion of the needed work because that was unexpected and occurred
only after initial efforts without a vessel failed. Doiron, 879 F.3d at 577. In
searching for expectations here, we start with examining the contractual
obligations. The Turnkey Bid is the relevant document, as the Master Service
Agreement’s more general language does not address the details of the P&A
work. The first page identifies the equipment being provided that would
15
Case: 16-31214 Document: 00514554790 Page: 16 Date Filed: 07/13/2018
No. 16-31214
perform the P&A work itself, the work crew details, and a description of three
vessels. Thus, unlike in Doiron, a need for vessels was understood. The vessels
were a tug, a cargo barge, and the OB 808 barge on which equipment and the
quarters for the work crew were located. Our analysis of “substantial” ignores
the need for vessels to transport equipment and crew to the platform and
considers only the other roles the vessels played. Id. at 576 n.47
The Turnkey Bid included a daily charge for use of each of the three
vessels. The daily charge for all three was $4,000. Crescent states that the
vessels were used for 33 days, resulting in a total cost of $132,000. Liberty
Mutual uses those numbers in its supplemental briefing to say the vessels’ cost
was 37 percent of the total contract bid of $360,735.20. Our precise fact issue,
though, is what was anticipated when the contract was entered. The
operations manager for Crescent testified that the time for completing the
work “was way more than what we estimated.” He was not asked what had
been the estimated number of days.
We now examine the use of the key vessel, the OB 808. The only crane
involved in the work was on the barge, moving equipment and materials back
and forth from the cargo barge to the well platform. The injured worker,
Corday Shoulder, testified that the three well platforms were small and there
was not enough room for all the equipment. The wireline unit was among the
equipment that remained on the barge. We mention the wireline unit in
particular because its purpose is central to plugging and abandoning the well.
We once described the work this way:
A “wireline” is a continuous cable used to perform various
subsurface functions in a well, including the lowering and raising
of various tools, instruments, and other devices. One of the
downhole tools used on a wireline is a “perforation gun,” a device
that originally used cartridges similar to rifle or pistol ammunition
but evolved to use “shaped charges,” cylinder-shaped ammunition
16
Case: 16-31214 Document: 00514554790 Page: 17 Date Filed: 07/13/2018
No. 16-31214
which is cone-shaped internally and fires directionally. It is formed
in layers, one a brittle compound of explosive material and the
other a metal alloy. When fired by any of several methods, this
bazooka-like ammunition shoots a short, concentrated stream of
molten alloy or “plasma” in the direction at which the open end of
the charge’s conically shaped interior is aimed. Generally,
perforating guns are used either early in the life of a well to
fractionate (“frac”) a hydrocarbon-bearing formation or zone so as
to commence or enhance production or, late in the life of a well or
of a particular formation, to perforate casing or tubing in
preparation for “squeezing” or sealing off the well or the zone to
“plug and abandon” it.
Roberts v. Cardinal Servs., 266 F.3d 368, 371–72 (5th Cir. 2001). The district
court’s decision in Roberts, written by Judge Clement a year before she became
a member of this court, called the wireline operation in P&A work an “essential
component of the drilling process.” Roberts v. Cardinal Servs., Inc., 2000 WL
1300390, at *3 (E.D. La. 2000).
The significance of the wireline operation is also highlighted in this
record. Shoulder testified that about 50 percent of the P&A operation was
wireline work. Further, in Crescent’s statement of undisputed facts filed in
the district court, it declared that the work on the well on which Shoulder was
injured “involved primarily wireline services.” Surely, wireline work was
similarly dominant as to the other two wells.
Mentioning wireline operations requires us to acknowledge that for 30
years, Fifth Circuit law has been that such work from a vessel is not a maritime
activity. See Thurmond v. Delta Well Surveyors, 836 F.2d 952, 955–56 (5th
Cir. 1988). We recently criticized that opinion, criticism that matters because
it was expressed en banc, because Thurmond and its descendants improperly
focus on whether services were inherently maritime as opposed to whether a
substantial amount of the work was to be performed from a vessel. Doiron,
879 F.3d at 573. Indeed, almost “none of these services [for offshore oil and
17
Case: 16-31214 Document: 00514554790 Page: 18 Date Filed: 07/13/2018
No. 16-31214
gas operations] are inherently maritime.” Id. What is important in the present
case is that use of the wireline unit on the vessel was central to the entire P&A
contract.
As to other uses of the OB 808, Shoulder drew a sketch of what was on
the OB 808. He outlined crew quarters, a galley, some offices, the mud tank,
the wireline unit, a crane, its generator, and a pump. There is no statement
that leaving all this equipment on the barge had been originally planned, nor
is it clear which features were structurally part of the OB 808. Still, surely the
investigation Crescent performed in order to estimate its costs before bidding
caused it to understand the space limitations and to plan in advance where
equipment would need to be. Also relevant to the importance of this vessel,
Carrizo adds that “Crescent designed and built the OB 808 for the specific
purpose of decommissioning wells at the end of their productive cycle.”
Certainly, then, the parties anticipated the OB 808 would be
indispensably involved in performance of the contract. A vessel’s being
indispensable may not equate to its role being “substantial,” though. In
attempting to define “substantial role,” Liberty Mutual and Starr argue that a
vessel does not play a substantial role when it is being used as a “work
platform” rather than as a navigable, self-propelled water vehicle. We do not
see its role as being properly demeaned in this way, so long as the vessel is
being used for more than transporting between land and the wellsite. Indeed,
its necessity as a work platform is particularly relevant. To the extent there
was not enough space on the fixed platform for the equipment, such as for the
wireline unit, the role of the vessel becomes more significant. Its utility as a
work platform comes from its being a vessel, as it could be positioned as needed
at the well site, then proceed to the other wells to perform similar functions.
According to Carrizo, the OB 808 was being used every day, certainly as crew
18
Case: 16-31214 Document: 00514554790 Page: 19 Date Filed: 07/13/2018
No. 16-31214
quarters but also for its crane, the wireline unit, and other equipment that
could not be moved onto a platform.
In conclusion, this contract anticipated the constant and substantial use
of multiple vessels. It was known that the OB 808 would be necessary as a
work platform; that essential equipment would need to remain on that vessel,
including a crane; that the most important component of the work, the wireline
operation, would be substantially controlled from the barge; and that other
incidental uses of the vessel would exist such as for crew quarters. This vessel
and the other two vessels were expected to perform an important role, indeed,
a substantial one, under the Crescent and Carrizo contract. It was a maritime
contract. The Louisiana Oilfield Anti-Indemnity Act does not apply.
AFFIRMED.
19