Hoda v. Rowan Companies, Inc.

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT July 29, 2005
_______________________ Charles R. Fulbruge III
Clerk
No. 04-30080
_______________________
BILLY HODA,
Plaintiff,
versus
ROWAN COMPANIES, INC., ET AL.,
Defendants;
ROWAN DRILLING CO., INC.,
Defendant-Third Party-Plaintiff-Appellee,
versus
GREENE’S PRESSURE TESTING AND RENTALS INC.;
ATLANTIC INS. CO.,
Third Party-Defendants-Appellants.
Appeals from the United States District Court
for the Eastern District of Louisiana
Before GARWOOD, JONES, and PRADO, Circuit Judges.
BY EDITH H. JONES:
This appeal requires us to sort once more through the
authorities distinguishing maritime and non-maritime contracts in
the offshore exploration and production industry. As is typical,
the final result turns on a minute parsing of the facts. Whether
this is the soundest jurisprudential approach may be doubted,
inasmuch as it creates uncertainty, spawns litigation, and hinders
the rational calculation of costs and risks by companies partici-
pating in this industry. Nevertheless, we are bound by the
approach this court has followed for more than two decades.
Billy Hoda, an employee of Appellant Greene’s Pressure
Testing and Rentals Inc. (“Greene”), was injured while working
onboard the Rowan Gorilla II, a jack-up drilling rig owned by
Appellee Rowan Drilling Co., Inc. and operating on the Outer
Continental Shelf. Hoda sued Rowan, which filed a third party
complaint against Greene and Atlantic Insurance Company for
defense, indemnity, and additional assured status based on the
parties’ Master Service Agreement.1 The indemnity provision
required Greene to indemnify Westport and Westport’s contractors,
including Rowan, from claims by Greene’s employees.
The corporate parties moved for summary judgment over the
enforceability of the indemnity provision.2 The Louisiana Oilfield
Anti-Indemnity Act, applicable if the contract is “non-maritime,”
invalidates just such indemnity provisions.3 On the other hand, if
1
Greene’s original contract was with Equitable Resources Energy
Company, which changed its name to Equitable Production Company. Equitable
Production Company later merged with Westport. The parties refer to the various
contracts and work orders as being with Westport, however.
2
Hoda settled, but the parties’ contractual dispute was preserved.
3
LA. REV. STAT. ANN. § 9:2780. Curiously, the parties only mention in
passing the Master Service Agreement’s choice of law clause (¶ 14), which
stipulates the application of general maritime law, but “if maritime law is held
inapplicable by a court of competent jurisdiction,” then Texas law applies.
Moreover, the contract calls solely for the performance of offshore services.
Our conclusion that the contract is maritime is consistent with the contract.
2
the contract is a “maritime” agreement, federal maritime law does
not bar enforcement of that provision.
Following a hearing on a developed but undisputed factual
record, the district court concluded that the contract was maritime
and granted Rowan’s motion, requiring indemnification. Greene’s
timely appealed. We affirm.
DISCUSSION
This court reviews a summary judgment de novo, using the
same standards as the district court. Green v. Vermilion Corp.,
144 F.3d 332, 334 (5th Cir. 1998). A careful description of the
facts is a necessary predicate to further analysis.
The Master Service Agreement covered “hydrostatic
testing, hydraulic torque wrench service, nut splitters, casing
cutting, pipeline/production and miscellaneous rental tool
equipment.” With this agreement in place, Greene’s performed under
individual work orders. When Hoda tripped over hoses on the deck
of the Gorilla II, he was engaged in torquing (or tightening) nuts
on the blow-out preventers on Westport’s wellhead.
The Greene’s employees worked on the decks of the
Gorilla II as there was no fixed platform at the wellhead. The
torquing constituted part of a project to install and change
blow-out preventers, a project accomplished in conjunction with
Rowan personnel who operated the crane and other equipment on the
rig. Greene’s employees torqued down and torqued up the bolts on
3
the blow-out preventers as they were installed on or removed from
the wellhead riser. Greene’s exact work did not require the use of
the vessel, her personnel or equipment, but Greene’s would have had
nothing to do had Rowan personnel not used the rig’s equipment to
set the blow-out preventers in place, align them, place the bolts
on them, and place the nuts on the bolts for tightening (or
performed the same functions in reverse order). Moreover, Greene’s
work was sequenced with and delayed by Rowan with gravel packing
operations that Rowan was separately undertaking on the well.
The legal framework for determining whether a contract is
maritime is set out in Davis & Sons, Inc. v. Gulf Oil Corp., 919
F.2d 313 (5th Cir. 1990). Under Davis, there are two parts to the
inquiry — an examination of the “historical treatment in the
jurisprudence” and a six-factor “fact-specific inquiry.” Id. at
316. In some circumstances, though not here, the historical
treatment is clear enough to make the second part of the test
“unimportant.” Demette v. Falcon Drilling Co., Inc., 280 F.3d 492,
500 (5th Cir. 2002). The six factors are:
(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?
4
(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. The maritime or non-maritime status of the
contract ultimately depends on its “nature and character,” not on
its place of execution or performance. Id.
No Fifth Circuit case has previously addressed whether
torquing bolts on a blow-out preventer from a jack-up drilling rig
used as a work platform constitutes a maritime contract. Davis’s
initial reference to the “historical treatment in the
jurisprudence,” while inconclusive, is nonetheless suggestive, for
present purposes.
Arguing by analogy, Greene’s cites this court’s decisions
holding that contracts for wireline services performed on a
partially drilled offshore oil and gas well are “distinctly”
non-maritime, even when the services are partially performed from
a special-purpose boat4 or on a jack-up drilling rig.5 Domingue
described a jack-up drilling rig as a mere work platform for the
execution of the wireline services contract. Domingue, 923 F.2d at
397. This argument draws some force from the fact that the Supreme
Court has rejected, albeit in a different context, this court’s
4
Thurmond v. Delta Well Surveyors, 836 F.2d 952 (5th Cir. 1988).
5
Domingue v. Ocean Drilling & Exploration Co., 923 F.2d 393, 394 n.1
(5th Cir. 1991). A wireline operation assists on partially drilled oil and gas
wells and gathers relevant geophysical data.
5
earlier, expansive equation of offshore drilling with “maritime
commerce.” Herb’s Welding, Inc. v. Gray, 470 U.S. 414, 105 S. Ct.
1421, 1426 (1985) (LHWCA did not cover injuries of oil and gas
worker on a fixed production platform in state territorial waters).
Beyond doubt, the torquing services Greene’s provided pertain
solely to oil and gas development and, in and of themselves, have
nothing to do with traditional maritime activity or commerce.6
Greene’s relies on Domingue’s statement that a “contract does not
become maritime simply because the wireline services were performed
aboard the drilling rig vessel. A specialty services contract
related to oil and gas exploration and drilling takes on a salty
flavor when [its] performance . . . is more than incidentally
related to the execution of the vessel’s mission.” 923 F.2d at
396.
Rowan, for its part, broadly characterizes the
Westport/Greene’s contract as integral to and integrated with the
activities of its specialty purpose vessel: by performing part of
the mission of the vessel, Greene’s contract is maritime. Rowan
relies on two cases in which contracts to provide casing services
on jack-up drilling rigs operating on the Outer Continental Shelf
were deemed maritime. Demette, 280 F.3d 492; Campbell v. Sonat
6
See, e.g., Sohyde Drilling & Marine Co. v. Coastal States Gas
Producing Co., 644 F.2d 1132, 1137 (5th Cir. 1981), in which this court observed
that blow-out preventers are not connected with maritime activity. Sohyde’s
relevance, as a property damage tort case, to the interpretation of maritime/non-
maritime contracts was, however, discounted in Domingue, 923 F.2d at 397 n.9.
But cf. Thurmond, 836 F.2d at 956 (discussing Sohyde).
6
Offshore Drilling, Inc., 979 F.2d 1115 (5th Cir. 1992).7 Campbell
furnishes the critical reasoning. Because the casing crew required
the use of the rig’s derrick and draw works to accomplish its
tasks, the contract work was deemed “inextricably intertwined” with
the “maritime activities” of the rig and its crew. Campbell, 979
F.2d at 1123, citing Davis, 919 F.2d at 317 (mission of “mobile
maintenance vessel” was “inextricably intertwined with maritime
activities”).8
That the “jurisprudential history” alluded to in Davis
cuts both ways is a trite observation.9 This court’s decisions
have reflected the inherent tensions between the non-maritime
nature and concerns of traditional oil and gas drilling and those
of the salty locale in which such exploration often occurs.
Greene’s position is supported by cases in which agreements for
self-contained oil and gas activities, that do not inherently
depend on a vessel and crew, are held not to constitute maritime
7
In Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 332 n.1 (5th
Cir. 1981), this court earlier held that federal maritime law controls
construction of an indemnity clause in a purchase order for casing services.
8
Rowan advances some other alleged connections of Greene’s work to
maritime activity that are wholly unpersuasive. These include the fact that
Greene’s personnel and equipment were loaded onto the Gorilla II by means of the
vessel’s cranes; that Greene’s personnel remained onboard the rig for a couple
of nights; and that the particular project involved a “repair” of the rig solely
because the blow-out preventers, which were installed on the wellhead riser
during drilling, were property of Rowan. The first two facts are descriptive,
not analytical, and the third is disingenuous.
9
See, e.g., Demette, 280 F.3d at 502 (DeMoss, J., dissenting); Davis,
919 F.2d at 315 (attempt to determine whether contract linked to offshore gas and
oil and production is maritime “has led to much confusion”); Lewis v. Glendel
Drilling Co., 898 F.2d 1083, 1087-88 (5th Cir. 1990) (suggesting en banc
treatment).
7
contracts. In this case, however, the torquing of the blow-out
preventers was not as independent and self-contained an activity as
Greene’s contends. “Even a contract for offshore drilling services
that does not mention any vessel is maritime if its execution
requires the use of a vessel.” Demette, 280 F.3d at 500-01. As
was noted above, 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 Rowan during the
drilling of the well. Greene’s services were “inextricably
intertwined” with the activity on the rig, were dependent on
Rowan’s placement of the equipment on which Greene’s employees
worked, and could not be performed without the rig’s direct
involvement. The more analogous caselaw is found in Campbell and
Demette and leans strongly toward finding a maritime contract.
This suggestion is confirmed by application of the
specific Davis factors. The work order called for Greene’s to
torque up and torque down the blow-out preventer stacks, and
Greene’s crew performed their services aboard a vessel in navigable
waters, in coordination with and deference to the rig’s personnel.
Hoda was injured while performing the specified work. The only one
of the Davis factors plausibly in doubt is Factor no. 4, the
question whether Greene’s work was “related to the mission of the
vessel.” We conclude, paraphrasing Demette, that torquing up and
torquing down blow-out preventers “is an integral part of drilling,
which is the primary purpose of the vessel.” 280 F.3d at 501.
8
This conclusion is not merely descriptive, but derives from the
functional interrelationship of Greene’s work with the rig.
It needs to be added that we do not accept Rowan’s broad
characterization whereby oil and gas services contracts are
maritime whenever they contribute to the mission of the jack-up
drilling rig. To do so would conflict with Davis and Thurmond and
would potentially be at odds with Herb’s Welding. Our ruling is,
like others in this area, confined to the facts before us.
CONCLUSION
For these reasons, the district court accurately applied
this court’s caselaw in concluding that the Greene’s/Westport
contract was on this occasion a maritime obligation. Consequently,
the contract’s indemnity provision is enforceable under general
maritime law. The judgment of the district court is AFFIRMED.
9