Devon Louisiana Corp. v. Petra Consultants, Inc.

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
F I L E D
September 13, 2007
Charles R. Fulbruge III
No. 05-40344 Clerk
DEVON LOUISIANA CORPORATION; ET AL.,
Plaintiffs,
DEVON LOUISIANA CORPORATION,
Plaintiff-Appellee,
v.
PETRA CONSULTANTS, INC.; ET AL.,
Defendants,
MAGNOLIA INDUSTRIAL FABRICATORS, INC.,
Defendant-Appellant.
***************
No. 05-40347
DEVON LOUISIANA CORPORATION; ET AL.,
Plaintiffs,
DEVON LOUISIANA CORPORATION,
Plaintiff-Appellee,
v.
ST. PAUL SURPLUS LINES,
Defendant-Appellant.
***************
No. 05-40350
DEVON LOUISIANA CORPORATION; ET AL.,
Plaintiffs,
DEVON LOUISIANA CORPORATION,
Plaintiff-
Third-Party Plaintiff-
Appellee,
v.
PETRA CONSULTANTS, INC.,
Defendant-
Third-Party Defendant-
Appellant.
2
Appeals from the United States District Court
for the Southern District of Texas
No. 3:04-CV-657
Before SMITH, GARZA, and OWEN, Circuit Judges.
PER CURIAM:*
Devon Louisiana Corporation (“Devon”) seeks contractual indemnity from
the defendants for costs incurred while defending a lawsuit for personal injuries
sustained by a worker during repairs to Devon’s offshore oil and gas platform.
Defendants appeal an adverse interlocutory ruling that the contractual indem-
nity provision is valid and enforceable under maritime law. We affirm.
I.
Devon owns an offshore oil and gas production platform maintained and
operated by independent contractors. Devon had almost identical “Master Ser-
vice Agreements” (“MSA’s”) with Magnolia Industrial Fabricators (“Magnolia”)
and Petra Consultants (“Petra”). The MSA’s served as blanket agreements that
are not complete by themselves and called for no specific work but contemplated
that “from time to time” Devon would initiate a work order requesting that
Magnolia and/or Petra “perform certain work or furnish certain services.” Under
the MSA’s, Magnolia and Petra agreed to defend and indemnify Devon against
all claims arising from work performed under the MSA’s, and Magnolia and
Petra were required to name Devon as an “additional insured” in a compre-
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
3
hensive general liability (“CGL”) policy.
Magnolia named Devon as an “additional insured” on a CGL policy from
St. Paul Surplus Lines (“St. Paul”), and Petra did the same on a policy from The
Gray Insurance Co. (“Gray”). Devon had an additional MSA with Gulf Fleet
Marine (“Gulf Fleet”) under which Gulf Fleet was to provide vessel support ser-
vices. The Devon/Gulf Fleet MSA required Gulf Fleet to provide defense, in-
demnity, and insurance for incidents arising out of the MSA.
Pursuant to the MSA’s, a Magnolia crew was dispatched to complete a
“punch list” of repairs to Devon’s platform, and a Petra employee supervised the
work. Gulf Fleet did not have an available vessel to support the repair crew, so
it contacted Abdon Callais Offshore, L.L.C., the owner of the M/V PETER CAL-
LAIS, to provide vessel support services; the crew was transported to the plat-
form aboard the PETER CALLAIS. Some of the repairs required Magnolia to
use welding equipment. Because there was no “hot work” permit, those fabrica-
tion and cutting procedures could not be performed aboard the fixed platform;
the welding equipment remained on the PETER CALLAIS, and the procedures
were performed on the vessel.
The crew encountered inclement weather and was unable to complete all
the items on the punch list. Of the work that was completed, some was per-
formed on the fixed platform, but all the welding work was performed on the
PETER CALLAIS. While moving heavy equipment on the PETER CALLAIS’s
deck, Harry Thomas, a rigger employed by Magnolia, was injured when a wave
propelled him into some welding equipment.
II.
Thomas sued Devon and other parties for his injuries. Devon filed a
third-party complaint against Gulf Fleet and its insurer, Boston Old Colony
Insurance Company (“Boston Old Colony”), for breach of contract and insurance
obligations under the Devon/Gulf Fleet MSA. Devon filed third-party complaints
4
against Magnolia for breach of the insurance and indemnity provisions in the
Devon/Magnolia MSA and against St. Paul for breach of its insurance obliga-
tions. Gulf Fleet and Boston Old Colony agreed to defend and indemnify Devon
against Thomas’s personal injury claims.
Devon, Gulf Fleet, and Boston Old Colony filed third-party claims against
Petra for negligence and breach of its defense, indemnity, and insurance obliga-
tions under the Devon/Petra MSA; they also alleged that Boston Old Colony was
subrogated to Devon’s claims against Petra and that the failure of Petra’s and
Magnolia’s insurance carriers (Gray and St. Paul, respectively) to indemnify Gulf
Fleet and Boston Old Colony were breaches of the MSA’s. Petra then sought and
obtained leave to file a counterclaim against Gulf Fleet and Boston Old Colony
alleging that Gulf Fleet and Boston Old Colony breached a contract to provide
insurance to Petra.
Magnolia and Petra separately moved for summary judgment seeking
dismissal of Devon’s claims for defense, indemnity, and insurance coverage.
They argued that Louisiana law governs the contract and that the indemnity
and insurance obligations are unenforceable under the Louisiana Oilfield Indem-
nity Act (“LOIA”), which provides, in part, that “any provision contained in . . .
an agreement pertaining to a well for oil, gas, or water . . . is void and unen-
forceable to the extent that it purports to or does provide for defense or indem-
nity . . . to the indemnitee against loss or liability for damages arising out of or
resulting from death or bodily injury to persons. . . .” LA. REV. STAT. ANN.
§ 9:2780(B) (2005).
Magnolia and Petra also moved for summary judgment on Devon’s breach
of contract claims regarding their obligation to have Devon named as an addi-
tional insured. Devon filed responses and filed cross-motions for summary judg-
ment, arguing that the indemnity and insurance provisions were enforceable un-
der maritime law and that summary judgment was appropriate for Devon’s
breach of contract claims regarding the “additional insured” provisions.
5
The district court granted in part and denied in part each summary judg-
ment motion. The court found that Petra and Magnolia had not breached their
contractual obligation to have Devon named as an additional insured; conse-
quently, it granted Petra’s and Magnolia’s motions as to the “additional insured”
breach of contract claims and denied Devon’s motions on these claims. The court
also found that maritime law governs the MSA’s and that the indemnity and
insurance provisions are valid and enforceable. It therefore granted Devon’s mo-
tion as to the indemnity and insurance claims and denied Magnolia’s and Petra’s
motions on those claims.
St. Paul moved for summary judgment on Devon’s claims that St. Paul had
breached its contractual obligation to insure Devon. St. Paul argued (i) that the
LOIA renders the “additional insured” provision unenforceable and (ii) that St.
Paul does not owe Devon anything under Magnolia’s CGL policy because Devon
breached its contract with Magnolia by failing to reimburse Magnolia for the
insurance premiums. The district court denied St. Paul’s motion. It concluded
that maritime law governs the MSA and that the additional insured provisions
are therefore valid and enforceable. It also held that Devon’s conduct did not
breach the CGL policy between Magnolia and St. Paul and that St. Paul is there-
fore required to insure Devon as required by the policy.
In this interlocutory appeal, Magnolia, Petra, and St. Paul assert that the
district court erred in concluding that maritime law governs the MSA’s. They
argue that the district court should have concluded that the MSA’s are governed
by Louisiana law, under which the defense, indemnity, and insurance provisions
are void and unenforceable. St. Paul also asserts that it was entitled to sum-
mary judgment on Devon’s breach of contract claim as to the “additional insured”
provision in Magnolia’s CGL policy. The appeals have been consolidated in this
proceeding.
6
III.
Devon claims that this court does not have jurisdiction. The regional
courts of appeals have jurisdiction over “[i]nterlocutory decrees of such district
courts or the judges thereof determining the rights and liabilities of the parties
to admiralty cases in which appeals from final decrees are allowed.” 28 U.S.C.
§ 1292(a)(3) (2000). “Courts have tended to construe this provision rather nar-
rowly and it has not been read to permit interlocutory appeals in admiralty ex-
cept where the order, regardless of the label affixed to it had the effect of deter-
mining the rights and obligations of the parties.” In re Complaint of Ingram
Towing Co., 59 F.3d 513, 516 (5th Cir. 1995). But it is “not necessary for all of
the rights and liabilities of all of the parties [to] be determined” as long as “the
order appealed from . . . conclusively determine[d] the merits of a claim or de-
fense.” Associated Metals & Minerals Corp. v. ALEXANDER’S UNITY MV, 41
F.3d 1007, 1010 (5th Cir. 1995) (internal quotations omitted).
The district court determined that “Magnolia [and Petra] must indemnify
Devon according to the terms of the MSA” and that “St. Paul must insure Devon
as required by the [CGL] policy.” Even though there are unresolved issues af-
fecting the parties’ rights and liabilities, the district court’s orders determined
the rights and liabilities of the parties with respect to the primary indemnity
and insurance claims at issue in these disputes. We therefore have jurisdiction
over these interlocutory appeals, so we deny Devon’s motion to dismiss for want
of jurisdiction.
IV.
We review the denial of summary judgment de novo, using the same stan-
dards as did the district court. Strong v. B.P. Exploration & Prod., Inc., 440 F.3d
665, 668 (5th Cir. 2006). The principal issue is whether the MSA’s are governed
by maritime law or Louisiana law. Maritime law applies to contracts deter-
mined to be maritime in nature. “Determination of the nature of a contract de-
7
pends in part on historical treatment in the jurisprudence and in part on a fact-
specific inquiry.” Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313, 316 (5th
Cir. 1990). We determine whether a contract is maritime by applying the six-
factor test in Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d at 316: “(1) [W]hat
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 as-
signed 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?” “The maritime or non-maritime status of the con-
tract ultimately depends on its ‘nature and character,’ not on its place of execu-
tion or performance.” Hoda v. Rowan Co., 419 F.3d 379, 381 (5th Cir. 2005)
(quoting Davis, 919 F.2d at 316).
A.
In some cases, the historical treatment in the jurisprudence may obviate
the need for a fact-specific inquiry. Because, however, we have not previously
considered whether a contract to repair a fixed platform is maritime, this first
prong of the Davis analysis is inconclusive. Nevertheless, our cases dealing with
offshore oil and gas contracts provide helpful suggestions on how the present
case should be resolved.1
The defendants argue that a contract for the mere repair of a fixed plat-
form cannot be maritime, because this court held in Laredo Offshore Construc-
tors, Inc. v. Hunt Oil Co, 754 F.2d 1223, 1231 (5th Cir. 1985), that a contract for
the construction of a fixed offshore platform is not maritime. In Laredo, how-
ever, it was the plaintiff’s failure to complete its contractual obligations to con-
1
Cf. Hoda, 419 F.3d at 381 (5th Cir. 2005) (“Davis’s initial reference to the ‘historical
treatment in the jurisprudence,’ while inconclusive, is nonetheless suggestive, for present pur-
poses.”).
8
struct the platform that “gave rise to” the lawsuit. Id. We noted that the result
might be different where the subject matter of a contract has a “direct relation-
ship with . . . traditional subjects of maritime law.” Id.
We also held in Domingue v. Ocean Drilling & Exploration Co., 923 F.2d
393, 397 (5th Cir. 1991), that where a contract is only incidentally related to a
vessel’s mission, it is not maritime.2 Domingue involved a contract for wireline
services on an offshore well. Id. at 394. The work order required the crew to use
a jack-up drilling rig. Id. Although a jack-up rig has been classified as a vessel
for maritime law purposes,3 in Domingue the use of a vessel was purely in-
cidental to the execution of the contract, and nothing about the contract required
that the contractor use a vessel instead of a mere work platform. Id. at 395, 397.
In contrast, the work in Campbell v. Sonat Offshore Drilling, Inc., 979 F.2d
1115, 1123 (5th Cir. 1992), required the use of a vessel as such. Campbell in-
volved casing work that required the use of a vessel such as a jack-up rig, along
with its derrick and draw works, because there was no fixed platform or derrick
at the work site. Id. Similarly, in Davis we noted that the “particular nature of
the terrain and production equipment required” the use of a vessel. Davis &
Sons, Inc., v. Gulf Oil Corp., 919 F.2d 313, 317 (5th Cir. 1990). Davis involved
a work crew that traveled from one offshore job site to another and made various
repairs to the offshore facilities and thus required a vessel “that could function
as a mobile work platform.” Id.
In Hoda, 419 F.3d at 379, 381, 383, we addressed an analogous situation
in which the crew’s “exact work did not require the use of [a] vessel,” but the
work “could not be performed without the [vessel’s] direct involvement.” Hoda
involved the torquing up and down of the bolts on blowout preventer stacks, a
2
See also Laredo, 754 F.2d at 1231 (“That the contract contemplated in part the use of
instruments of admiralty . . . is not sufficient” to refrain from applying state law.).
3
See Vickers v. Chiles Drilling Co., 822 F.2d 535, 537 (5th Cir. 1987).
9
task that by itself did not require the use of the vessel or its crew but that would
have been irrelevant and impossible if the vessel’s crew had not used the vessel’s
rig to set the stacks and bolts in place. Id. at 381.
The punch list required Magnolia’s crew to make certain repairs to Devon’s
platform. Although the “exact work” on the punch list did not require the use of
a vessel per se, the failure of the parties to obtain a hot work permit meant that
the welding work, which was a prerequisite for completing some of the tasks on
the punch list, had to be completed on a vessel, not the fixed platform. We
deemed the wireline contract in Domingue, 923 F.2d at 397, non-maritime
because the need for a vessel arose purely from the lack of a fixed platform. The
contract here required that the parties provide a vessel per se, because only a
vessel working alongside the already existing fixed platform could provide a
suitable place to perform the hot work. As was the case in Davis, Campbell, and
Hoda, the instant contract required that a vessel be provided.4
It is undisputed that the hot work could have been completed on the oil
and gas platform if the appropriate permit had been obtained. The inability to
perform the hot work on the vessel was not caused by any physical or technical
limitations but by the legal limitations resulting from the absence of a permit.
That is, however, a distinction without a legal difference. Hoda, Davis, and
Campbell do not require that the need for a vessel be caused by physical or tech-
nical limitations. There is no practical difference between having to use a vessel
because of physical realities and having to use one because of legal restrictions.
A vessel is required in both situations.
The jurisprudence therefore indicates that where the use of a vessel as
such is required for completion of the contract, maritime law appropriately
governs. We must now apply the six-factor Davis test to the facts.
4
See also Demette v. Falcon Drilling Co., 280 F.3d 492, 500-01 (5th Cir. 2002) (“Even
a contract for offshore drilling services that does not mention any vessel is maritime if its exe-
cution requires the use of vessels. This is true for contracts that may also involve obligations
performed on land.”).
10
B.
The parties ask us to consider whether the Davis factors should be anal-
yzed in terms of what the parties expected would happen, or rather in terms of
what actually happened during performance of the contract. Magnolia claims
the parties expected that all the work would take place on the fixed platform.
According to defendants, we should apply the Davis factors to the facts as the
parties intended them when the punch list was submitted pursuant to the
MSA’s. Defendants contend that an intent-based analysis would compel the
conclusion that the contract is non-maritime and accordingly that Louisiana law
applies. Devon, on the other hand, argues that the Davis factors must be
applied to the facts as they actually occurred: Because some of the work was re-
quired to take place on a vessel, Devon says that that approach compels the con-
clusion that the contract is maritime, so maritime law should apply.
The Davis factors primarily address the nature and character of the con-
tract as it was actually executed; that conclusion finds support in the specific
language of the factors themselves. The second and sixth factors speak in terms
of what “actually” happened in the performance of the contract. Factors three,
four, and five use the past tense to analyze what kind of work “was” being done
and how it was accomplished. Only the first factorSSwhat does the specific work
order in effect at the time of injury provide—uses language that could be inter-
preted as taking an ex ante view of the contract. But the first factor also anal-
yzes the specific work order “in effect at the time of injury,” thus possibly con-
templating that the work order “in effect” when the injury occurred could be
different from the parties’ ex ante expectations.
Viewed in this way, the Davis factors suggest that the contract is mari-
time. Factor six weighs strongly in favor of finding a maritime contract, because
the injured worker was engaged in the inherently maritime task of securing the
vessel’s cargo at the time of injury. Similarly, factors two and five weigh in favor
of finding a maritime contract, because there is no dispute that Thomas and the
11
crew were required to use, and actually did use, the vessel qua vessel.
Regarding factor three, we agree with the district court’s determination
that when the vessel departed for the platform without the requisite permit, the
crew was necessarily assigned to do some of its work on the vessel. Factor one
asks us to evaluate the work order in effect at the time of the injury. Although
the contract initially may have been contemplated as non-maritime because all
of the work on the punch list could have been performed on the fixed platform,
the work order as implemented by the parties required that they use a vessel to
complete some of the required tasks.
Factor four requires us to analyze the relationship between the work per-
formed and the mission of the vessel. We agree with the district court that part
of the mission was to aid in the repairs to the platform. Some of that work re-
quired the vessel to convey people and cargo to the repair site, a task integral to
completing the repairs. Thomas’s work as a rigger, which involved loading and
unloading cargo to and from the vessel, was certainly related to the transporta-
tion function of the vessel and contributed to the repair of the platform. Simi-
larly, the hot work that took place on the vessel was “integral” in repairing the
platform, a task that was part of the vessel’s mission.5 The Davis factors thus
weigh in favor of finding that the contract is maritime.
Even if we were to adopt an approach that focused on the parties’ ex ante
expectations, we likely would reach the same result. The MSA’s have a clause
that states, “This Contract shall be governed by the General Maritime laws of
the United States” unless it is judicially determined that such laws do not apply.
That language indicates that the parties intended and expected that maritime
law would apply. As we noted in Hoda, 419 F.3d at 380 n.3, “[o]ur conclusion
that maritime law applies is consistent with the contract.”
Because we conclude that maritime law applies to the MSA’s, the indem-
5
See Hoda, 419 F.3d at 383 (citing Demette v. Falcon Drilling Co., 280 F.3d 492, 501
(5th Cir. 2002)).
12
nity provisions contained therein are valid and enforceable. We do not reach the
issues of whether and to what extent Louisiana law applies.
V.
St. Paul raises the ancillary argument that, even if maritime law applies,
St. Paul is not required to insure Devon pursuant to the additional insured pro-
visions in the CGL policy between St. Paul and Magnolia. St. Paul contends it
had no obligation to insure Devon because Devon breached its contract with
Magnolia by failing to reimburse Magnolia for the insurance premiums.
St. Paul has abandoned this argument on appeal, because it has inade-
quately briefed it. St. Paul points to evidence in the record that Devon did not
make premium payments; it uses that evidence primarily to urge that the addi-
tional insured provision is unenforceable under the LOIA. In addition, St. Paul
includes one paragraph arguing that Devon is not entitled to additional insured
coverage even if the LOIA does not apply:
In the alternative, Devon is not entitled to additional insured cov-
erage regardless of whether [LOIA] applies. Devon is not entitled
to be named as an additional insured, because Devon breached its
obligation to pay Magnolia for the additional insured coverage and,
therefore, no such additional insured obligation existed.
This single paragraph with no citations to authority is insufficient to con-
stitute an argument on appeal. We have consistently held that such arguments
are abandoned for inadequate briefing. In L & A Contracting Co. v. S. Concrete
Servs., Inc., 17 F.3d 106, 113 (5th Cir. 1994), we held that a party had aban-
doned a challenge because of inadequate briefing by citing “no authority in its
one-page argument on the attorney fee question.”6 Similarly, in Kohler v. En-
glade, 470 F.3d 1104, 1114 (5th Cir. 2006), we held that a party had inade-
6
See also In re Bouchie, 324 F.3d 780, 786 (5th Cir. 2003) (“As Rush Truck cites no au-
thority for this proposition, it is not adequately briefed and is therefore waived.”).
13
quately briefed an issue because “he failed to cite any legal authority for the
proposition that one has a constitutional right to have an executed search
warrant filed under seal.” We have also held that an argument consisting solely
of one citation to an authority constituted inadequate briefing. See Salazar-
Regino v. Trominski, 415 F.3d 436, 452 (5th Cir. 2005), vacated on other grounds,
127 S. Ct. 827 (2006).
In sum, maritime law applies to the MSA’s, so we AFFIRM as to the de-
fense, indemnity, and insurance issues raised on appeal, and we REMAND for
further proceedings.
14