Sanamo v. Trico Marine Svc Inc

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
June 24, 2003
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
_________________________ Clerk
No. 02-31072
SUMMARY CALENDAR
_________________________

NORMAN SANAMO

Plaintiff

v.

TRICO MARINE SERVICES, INC.; ET AL

Defendants

And

APPLIED DRILLING TECHNOLOGY INC.; ENSCO OFFSHORE COMPANY

Third Party Plaintiffs – Appellees

v.

SLADCO INC.

Third Party Defendant – Appellant
______________________________________________________________________________

Appeal from the United States District Court
for the Eastern District of Louisiana
(00-CV-2476-S)
______________________________________________________________________________

Before REYNALDO G. GARZA, JONES, and EMILIO M. GARZA, Circuit Judges.

REYNALDO G. GARZA, Circuit Judge:1

1
Pursuant to 5th Cir. R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5th Cir. R.

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 Appellant Sladco, Inc. appeals from the district court’s order granting summary judgement

in favor of appellees Ensco Offshore Company and Applied Drilling Technology, Inc., on third

party claims against Sladco for indemnity and defense. For the following reasons, the judgement

of the district court is affirmed. We remand solely for a determination regarding the amount of

attorney fees owed.

I.

FACTUAL AND PROCEDURAL BACKGROUND

In July of 1991, Applied Drilling Technology, Inc. (hereinafter “ADTI”) entered a Master

Service Contract with Sladco, Inc. (hereafter “Sladco”). On April 13, 1999, ADTI executed a

Day Work Drilling Contract with Ensco Offshore Company (“Ensco”), according to which Ensco

provided ENSCO RIG 67, a jack-up drilling rig2, which ADTI used to drill a well for its

customer, Remington Oil and Gas, in the Gulf of Mexico.

Norman Sanamo was working as a casing crew pusher for the Sladco casing crew that had

been assigned to perform services aboard ENSCO RIG 67.3 On February 9, 2000, Sanamo and his

crew were transported to the jack-up rig via the M/V CIMARRON RIVER, a vessel owned by

47.5.4.
2
“A jack-up drilling rig is a floating rig with legs that can be lowered into the seabed.
Once the legs are secured in the seabed, the rig can be ‘jacked up’ out of the water to create a
drilling platform. The process can be reversed, and a jack-up rig can be towed to new sites.”
Demette v. Falcon Drilling Co., Inc., 280 F.3d 492, 495 (5th Cir. 2002); see also Thomas J.
Schoenbaum, 1 Admiralty and Maritime Law § 3-9, 100 n. 8 (West 2d Ed. 1994)(describing jack-
up rigs and other types of rigs).
3
“Casing is an activity performed during the [process of] drilling for oil, whether onshore
or offshore; it involves the welding together and hammering of pipe into the subsurface of the
earth to create a permanent construction.” Demette, 280 F.3d at 495 (internal quotation and
citation omitted).

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Trico Marine Services, Inc. (hereinafter “Trico”).

The following day, after the casing services had been completed, Sanamo was departing

the rig via a personnel basket attached to one of the cranes aboard RIG 67. Sanamo and two

other Sladco employees climbed aboard the personnel basket while it was on the deck of the rig,

and were then lifted off of the rig and lowered in the direction of the stern deck of the M/V

CIMARRON RIVER, which was to take the crew members back to shore. During the attempted

transfer, Sanamo was injured when the personnel basket struck the deck of the crewboat with

significant force.

Sanamo filed suit against ADTI, Ensco and Trico, alleging that he was injured as a result

of the defendants’ negligence and the negligence of defendants’ employees. ADTI and Ensco filed

a third-party claim against Sladco seeking defense and indemnity for the underlying claim. ADTI

and Ensco alleged that the Master Service Agreement between ADTI and Sladco included a

reciprocal indemnity obligation, and that Sladco had agreed to hold harmless and indemnify ADTI

–along with any other parties contracting with ADTI– for any injuries sustained by Sladco’s

employees.

ADTI and Ensco filed a Motion for Summary Judgment on the issue of defense and

indemnity, which the district court granted on May 21, 2002. Although the underlying suit filed by

Sanamo was settled, the defense and indemnity issue remained in dispute. As part of the

settlement, Sladco reserved the right to appeal the district court’s decision granting summary

judgment on the claims for defense and indemnity.

Sladco filed a Motion for Reconsideration/New Trial, which the district court denied.

Sladco then filed timely notice of appeal. The parties have agreed to ask the district court to

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determine the amount of attorney’s fees and expenses owed after the indemnity issues presented

by this appeal are decided.

II.

DISCUSSION

A. Jurisdiction & Standard of Review

We have jurisdiction pursuant to 28 U.S.C. § 1291 because Sladco appeals from a final

decision of the district court.4 We review a district court’s grant of summary judgment de novo,

applying the same standards as would the district court. S&W Enterprises, L.L.C. v. Southtrust

Bank of Alabama, NA, 315 F.3d 533, 537 (5th Cir. 2003). Summary judgment shall be rendered

when the pleadings, depositions, answers to interrogatories, and admissions on file, together with

affidavits, if any, show that there is no genuine issue of material fact and the moving party is

entitled to judgment as a matter of law. Id. (citing FED.R.CIV.P 56(c); Celotex Corp. v. Catrett,

477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

B. General Discussion and Basis for Claims

As noted above, this case arises from a maritime personal injury suit filed by Norman

Sanamo. ADTI and Ensco (collectively referred to as “ADTI/Ensco”) filed a third-party complaint

against Sladco seeking defense and indemnity for the underlying personal injury claim. According

4
Although the issue of attorney’s fees remains unresolved, generally such an issue does
not prevent an appeal of a judgment based on § 1291. Budinich v. Becton Dickinson & Co., 486
U.S. 196, 202, 108 U.S. 1717, 1722 (1988) (“an unresolved issue of attorney’s fees for the
litigation in question does not prevent judgment on the merits from being final”). Furthermore, no
exception to the general rule regarding attorney’s fees is present. See Noble Drilling, Inc. v.
Davis, 64 F.3d 191 (5th Cir. 1995).

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to ADTI/Ensco, Sladco is required to defend and indemnify them for Sanamo’s claims under the

reciprocal indemnity provisions of the Master Service Agreement between ADTI and Sladco.

ADTI/Ensco argues that Sanamo is a “subcontractor’s employee” and that Ensco is one of the

“other parties contracting with Contractor” envisioned by sections 10(a) and (b) of the July 7,

1992 amendment to the agreement.

In the district court, Sladco argued that the contract at issue was governed by state law,

including the Louisiana Oilfield Indemnity Act (“LOIA”), which prohibits indemnity agreements.

In the alternative, Sladco argued that federal law prohibits any agreement which requires an

employer to indemnify vessel interests.

The district court found that the indemnity provision at issue is contained in a maritime

contract and is governed by maritime law –thus, the court found Sladco’s arguments relating to

LOIA unavailing. On appeal, Sladco does not challenge the district court’s determination that

maritime law applies. Therefore, this appeal centers around the applicability of Section 905(b) of

the Longshore and Harbor Workers Compensation Act.

C. Issue One: Whether ENSCO RIG 67 was an OCSLA situs at the time of Sanamo’s injury.

Sladco contends that the trial court erred in granting ADTI/Ensco’s motion for summary

judgment because there was no evidence offered that demonstrated ENSCO RIG 67 was an

OCSLA situs.

Sladco points out that, while ENSCO RIG 67 is unquestionably a jack up rig, there was

no summary judgment evidence to establish that the rig was in fact “jacked up.” Sladco accurately

describes a jack-up rig as a “potential” OCSLA situs. This circuit has clearly determined that a

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jack-up rig, if “jacked up,” constitutes an OCSLA situs. Demette v. Falcon Drilling Company,

Inc., 280 F.3d 492, 498 (5th Cir. 2002); see also Diamond Offshore Company v. A&B Builders,

Inc., 302 F.3d 531, 543 (5th Cir. 2002). This is because a jack-up rig, when jacked up, is “a

device temporarily attached to the seabed, which was erected on the OCS for the purpose of

drilling for oil.” Thus, a jacked-up rig falls into the second category of OCS situs. Diamond

Offshore Company, 302 F.3d at 543.

A jack-up rig that is not jacked up, however, does not necessarily constitute an OCS situs.

As noted earlier, a jack up rig is a floating rig that can be towed to a particular site. Until it is

attached to the seabed and erected, it cannot be considered an OCSLA situs.

As Sladco points out, in Diamond Offshore Company this Court determined that, in order

to satisfy its burden of establishing there is no issue of material fact in regards to the issue of

whether an accident occurred on an OCSLA situs, summary judgment evidence must establish

that a rig (or other device) is “attached” to and “erected” on the seabed. Id. at 544-45. Though it

may be obvious, this burden can be overcome by simply demonstrating that a jack-up rig was

actually jacked up at the time the relevant injury occurred.

Pointing to our decision in Diamond Offshore, Sladco contends that ADTI/Ensco failed to

produce any summary judgment evidence demonstrating that the ENSCO RIG 67 was “jacked

up” at the time Sanamo’s injury occurred, and that therefore the case should be remanded to the

district court for further findings. In Diamond Offshore, this Court was faced with a very similar

situation to the one at hand. Relying on our decision in Demette, this Court reversed a summary

judgment decision and remanded the case to the district court so that the record could be

supplemented in order to establish that a jack-up drilling rig was attached to and erected on the

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seabed at the time the plaintiff was injured –i.e., to establish that the rig was actually “jacked up.”

In response to Sladco’s claim that there was no summary judgment evidence establishing

that the Ensco rig was jacked up, ADTI/Ensco filed an unopposed motion for leave to supplement

the record on appeal, which was granted. ADTI/Ensco supplemented the record by filing

deposition transcripts from Norman Sanamo and Joe Lopez, both of which were actually cited in

appellees’ original motion for summary judgment. According to ADTI/Ensco, the transcripts were

inadvertently not attached to the memorandum in support of their motion for summary judgment

in the district court.

The deposition testimony clearly establishes that ENSCO RIG 67 was “jacked up” at the

time of the incident. In particular, testimony from Joe Lopez –who was working on RIG 67 at the

time of the incident in question– clarifies that the rig was jacked up. After establishing that

ENSCO RIG 67 was operating at the time of the incident, Lopez was asked if “it was jacked up

on the outer continental shelf, temporary [sic]?” To which he replied, “Yes, sir.”

Though Sladco, in its reply brief, acknowledges the supplemental memorandum, it

reiterates that the summary judgment evidence did not establish that ENSCO RIG 67 was jacked

up at the time of Sanamo’s accident, as required by Diamond Offshore Drilling.

Although the parties and the district court had the benefit of our decision in Demette,

which provided the basis for our decision in Diamond Offshore Drilling, the opinion in Diamond

Offshore Drilling was rendered subsequent to the District Court’s grant of ADTI/Ensco’s motion

for summary judgement. The Diamond Offshore Drilling decision is much more explicit in terms

of what is required for summary judgment evidence than is Demette. In Diamond Offshore, the

case was reversed and remanded for additional summary judgment proof; according to the court

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the remand “should require only a brief supplement to the record detailing the contact, if any, that

the [rig] had with the ocean floor at the time of [plaintiff’s] alleged injury.” Id. at 546.

In the case at hand, remanding for such a purpose would be impractical and superfluous.

The record, as it now stands, includes the requisite evidence to demonstrate that, at the time of

the alleged injury, the rig constituted an OCSLA situs. Furthermore, the evidence at issue was

actually cited in the movant’s motion for summary judgment before the district court. This Court

can affirm a grant of summary judgment on any grounds supported by the record. Jones v. NCNB

Texas National Bank, 966 F.2d 169, 172 (5th Cir. 1992). Sladco has never offered any evidence

to demonstrate that the Ensco rig was not jacked up. In short, it has offered no such evidence

because no such evidence exists. To the extent that the district court granted summary judgment

on the basis of ENSCO RIG 67's status as an OCSLA situs because it was jacked up at the time

of Sanamo’s injury, that portion of the district court’s judgment is affirmed.

D. Issue Two: Whether Section 905(c) of the LHWCA is applicable.

Sladco’s main point of contention is that the indemnity provisions found in the master

service contract are unenforceable. The majority of the arguments Sladco offers on appeal are

derivatives of this general contention.

In the district court, Sladco argued that state law –in particular, the Louisiana Oilfield

Indemnity Act (“LOIA”)– voided the indemnity agreements at issue. As previously noted, Sladco

does not challenge the district court’s determination that the indemnity provisions were part of a

maritime contract. “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,

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federal maritime law applies of its own force, and state law does not apply.” Demette, 280 F.3d at

497.

Sladco contends that Section 905(b) of the Longshore and Harbor Workers Compensation

Act applies and voids the indemnity agreements at issue. Section 905(b) prohibits indemnification

by the employer for a claim brought by the employee against the vessel owner due to bodily

injury. Sumrall v. Ensco Offshore Co., 291 F.3d 316, 322-23 (5th Cir. 2002). Sladco concedes

that Section 905(c) contains an exception for cases where: (a) an employee is entitled to receive

benefits under the Outer Continental Shelf Lands Act (43 U.S.C. § 1333) and (b) the indemnity

agreements are reciprocal; however, Sladco argues that the exception does not apply to the case

at hand.

Sladco contends that OCSLA is not applicable because Sanamo was injured on a crewboat

on navigable waters, not on an OCS site –i.e., not on the jacked up rig. Although Sladco admits

Sanamo satisfies the requirements of the LHWCA, Sladco argues that the LHWCA applies of its

own force and not through the OCSLA. If Sanamo were entitled to receive benefits by virtue of

Section 1333(b) of the OCSLA, then Section 905(c) of the LHWCA provides an exception,

allowing reciprocal indemnity agreements. In other words, Sladco contends that Sanamo’s injury

did not occur on an OCS site and that thus the OCSLA is not applicable. According to Sladco,

the exception allowing mutual indemnity agreements contained in 33 U.S.C. § 905(c) does not

apply. Therefore the resolution of this portion of the appeal hinges on whether or not Sanamo was

injured on an OCS site.

To cut to the chase, ADTI/Ensco and Sladco differ in how they characterize where

Sanamo was injured. According to ADTI/Ensco, the injury occurred on ENSCO RIG 67.

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According to Sladco, the injury occurred on the deck of the crewboat. As noted in the factual

synopsis above, Sanamo’s injury occurred when the personnel basket being lowered by a crane

attached to RIG 67 slammed into the deck of a crewboat. The record clearly establishes that

Sanamo was inside the basket when the injury occurred.

According to Sladco, if we affirm the district court’s decision we would be extending the

definition of OCSLA situs to include crewboats on navigable waters that are not attached to the

seabed. Despite the fervency with which appellant argues its position, we do not believe affirming

the district court’s decision would lead to any such result.

According to the district court’s order granting summary judgment, “It is undisputed that

Sanamo was injured while he was in a personnel basket that was attached to a crane aboard the

ENSCO Rig 67. The ENSCO Rig 67 is an OCSLA situs; therefore, Sanamo’s injury occurred as

the result of operations on the OCS.” At the risk of complicating what the district court may have

justly determined to be a simple issue, we turn to existing doctrine to aid in our analysis of this

portion of the case.

In Hollier v. Union Texas Petroleum Corp., 972 F.2d 662 (5th Cir. 1992), the plaintiff

died while attempting to cross from a crewboat to a fixed platform on the outer continental shelf

when he slipped between the boat and the platform, was crushed, and then drowned. The court

determined that the plaintiff was injured on an OCSLA situs –the platform– because he was in

physical contact with the platform at the time of his injury, despite the fact that he was also in

contact with the crewboat.

This Court revisited Hollier in the case of Hogden v. Forrest Oil Corp., 87 F.3d 1512 (5th

Cir. 1996). In Hogden, the plaintiff was injured when he attempted a rope swing transfer from an

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oil platform to a vessel. Although the rope was attached to the platform, an OCSLA situs, the

plaintiff was actually injured upon impact with the vessel to which he was attempting to transfer.

The panel first noted that, according to Hollier, the OCSLA situs test is met when a plaintiff is

injured while in contact with both an OCSLA situs and a vessel. The panel then held that because

the plaintiff was in physical contact with the rope –which was attached to and thus a portion of

the platform he was departing– at the time of his physical contact with the back deck of the

vessel, the OCSLA situs requirement was met.

The existing circuit precedent cited above suggests that, because Sanamo was in contact

with the crane which was attached to and part of Ensco Rig 67 at the time of the injury, the

OCSLA situs requirement is met. This portion of the district court’s judgment is therefore

affirmed.

E. Issue Three: Whether the indemnity provisions are reciprocal.

Sladco also argues that the district court erred in finding that the indemnity provisions in

the contract between Sladco and ADTI were reciprocal. As previously noted, the exception

allowing for indemnity agreements in Section 905(c) of the LHWCA requires that any

indemnification between a vessel owner and employer be reciprocal in order for such indemnity

agreements to be valid.

Sections 10(a) and 10(b) of the Amended Master Service Agreement between Sladco and

ADTI provide for the two parties to indemnify each other. The provisions are virtually identical

and, as noted by the district court, are unambiguous. Sladco apparently recognizes this fact and

directs our attention instead to additional contract provisions it avers place further obligations on

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Sladco which are not reciprocated by ADTI.

Sladco first argues that Section 10(c) of the contract places a more onerous burden on

Sladco. Section 10(c) reads as follows:

To the extent of Subcontractor’s [Sladco’s] negligence, Subcontractor indemnifies and
will hold Contractor harmless from any liability to third parties for bodily injury or
property damage which arise out of and during Subcontractor’s performance under this
Contract; however, notwithstanding anything to the contrary herein, no party shall be
liable to the other for any special, indirect or consequential damages of any nature or
kind due to any cause whatsoever.

Although there is no equivalent provision pertaining to ADTI, a closer look at the language of

10(c) reveals that the section does not impose any new obligations on Sladco.

The first clause of 10(c) does not affect the reciprocal indemnity agreement provisions

because it concerns Sladco’s liability to third parties to the extent of its own negligence. The

absence of this section or the inclusion of an identical section pertaining to the liability of ADTI

would not change the legal obligations of the parties. The first portion of Section 10(c) merely

restates obligations that either party to the contract would have as a matter of law, even absent

such a provision. The second clause similarly does not contain any new obligations and does not

affect the reciprocity in Sections 10(a) and (b).

Sladco also contends that the insurance requirements found in the contract are not

reciprocal. Indeed, the Master Service Contract places a series of insurance requirements on

Sladco that are not likewise imposed on ADTI. Despite this fact, however, the insurance

requirements cannot, according to circuit precedent, be said to create additional liabilities

sufficient to implicate the prohibitions of 905(b). We have rejected the argument that differing

insurance obligations destroys the reciprocity of indemnity provisions. Sumrall v. Ensco Offshore

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Co., 291 F.3d 316, 325 n.12 (5th Cir. 2002) (“We have determined that differing insurance

obligations do not create additional indirect liability sufficient to implicate the prohibitions of

subsection 905(b)”).

In support of its position, Sladco cites Falcon Operators, Inc. v PMP Wireline Services,

Inc., an unpublished district court decision which found indemnity clauses void under 905(b)

because, among other reasons, the contract required only one party to procure insurance. We find

Sladco’s reliance on this case unpersuasive. Not only are we not bound by such precedent, but, in

addition, this Court has explicitly rejected its conclusion. See Sumrall, 291 F.3d at 324-25; see

also Diamond Offshore Company, 302 F.3d at 548. The fact that the insurance provision of the

Master Service Contract required Sladco to procure insurance, but that ADTI was not required to

do the same does not impact the reciprocity of the indemnity agreement. Diamond Offshore

Company, 302 F.3d at 548.

Sladco essentially asks that we overrule our decisions in Sumrall and Diamond, arguing

that the holdings in those cases were reached in error. Even if we agreed with Sladco’s assertion,

which we do not, it is well established that a panel of this Court cannot overrule the decision of

another panel. Central Pines Land Co. v. United States, 274 F.3d 881, 893 (5th Cir. 2001).

In support of its position, Sladco also points to the reasoning found in Ogea v. Loffland

Brothers Company, 622 F.2d 186 (5th Cir. 1980), Klepac v. Champlin Petroleum Co., 842 F.2d

746 (5th Cir. 1988), and Tullier v. Halliburton Geophysical Services, Inc., 81 F.3d 552 (5th Cir.

1996). According to Sladco, these cases support its argument that the indemnity obligations at

issue are not reciprocal. In so arguing, however, Sladco ignores the key factual distinction

between this series of cases and the case at hand. Judge Jones, the author of the Tullier decision,

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when summarizing this body of case law, noted that “The controlling fact in Ogea, as in [Tullier],

LeBlanc, Klepac, and Woods is the existence of ‘additional assured’ coverage whereby an

indemnitee agreed to procure insurance coverage for the benefit of the indemnitor.” Tullier, 81

F.3d at 554. In the case at hand, Sladco is the indemnitor; there is no contractual requirement for

the indemnitee, ADTI, to purchase insurance coverage for Sladco. Therefore the “controlling

fact” in this line of cases is not present.

The indemnity obligations at issue are reciprocal and enforceable according to the dictates

of 33 U.S.C. 905(c). Therefore the portion of the district court’s judgment related to these issues

is affirmed.5

III.

CONCLUSION

As the able and thorough district court succinctly noted in summary, “the contract is a

maritime contract, the OCSLA applies to this case, Louisiana law does not apply, Sanamo is

subject to the LHWCA by virtue of the OCSLA, the indemnity agreement between ADTI and

Sladco is valid, and Ensco is a party contracting with ADTI. Accordingly, ADTI and Ensco are

entitled to defense and indemnity as a matter of law.” For the foregoing reasons, the judgment of

the district court is AFFIRMED. We REMAND to the district court for a determination regarding

the amount of attorney fees owed.

5
Sladco argues that Ensco’s indemnity claims fail for the same reasons ADTI’s fail.
However, as described above, Sladco’s arguments proved unavailing. Under the Master Service
Agreement, Sladco agreed to indemnify and hold harmless, not only ADTI, but also a series of
other parties, including “all other parties contracting with Contractor”; because Ensco is one of
the “other parties contracting with Contractor,” Sladco is obligated to protect, defend, indemnify
and hold harmless Ensco as well as ADTI.

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