United States Court of Appeals,
Fifth Circuit.
No. 92-3379.
Hubert J. DUPRE, Jr., Plaintiff,
v.
PENROD DRILLING CORPORATION, Defendant-Third Party Plaintiff-Appellee,
v.
TOTAL MINATOME CORPORATION, Third Party Defendant Appellant.
June 17, 1993.
Appeal from the United States District Court For the Eastern District of Louisiana.
Before REYNALDO G. GARZA, HIGGINBOTHAM, and EMILIO M. GARZA, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
This case raises the issue of whether a contract for the supply and use of a vessel for drilling,
completing, and tying-back oil wells, is maritime or nonmaritime. Total Minatome Corporation
("Minatome") and Penrod Drilling Corporation ("Penrod") agree that if the contract is nonmaritime,
it is governed by Louisiana law and its indemnity provision is unenforceable. The parties also agree
that if the contract is maritime, then the indemnity provision of the contract is governed by Texas law,
pursuant to a choice-of-law provision in the contract. Minatome contends that the district court erred
in concluding that the contract is maritime, and that the indemnity provision of the contract is
enforceable under Texas law. We disagree, and accordingly affirm the district court's grant of
summary judgment for Penrod.
I
Penrod entered into a contract with Minatome, whereby Penrod agreed to provide equipment
and labor, and perform services for Minatome's four wells (G-1, G-2, G-3, and G-4) located in
Vermillion Block 268 off the Louisiana coast on the outer continental shelf. The contract specifically
required Penrod to equip and operate Penrod 97, a special purpose offshore jack-up drilling vessel,
for drilling and completion of Minatome's four wells, and for tying-back the four wells to Minatome's
fixed offshore platform.
Hubert J. Dupre, Jr., a Minatome employee, allegedly slipped and fell on mud discharged from
Penrod's jack-up rig onto scaffolding erected on Minatome's offshore platform. Dupre subsequently
filed an action for damages against Penrod for an alleged injury to his lower back, claiming that his
injuries were caused by "the negligence of Penrod in the operation of [Penrod 97]." Record on
Appeal, vol. 2, at 234.
Penrod, in turn, filed a third-party complaint against Minatome, seeking indemnification under
the contract.1 Both parties filed motions for summary judgment on Penrod's indemnification claim.
Minatome argued that the Louisiana Oilfield Indemnity Act of 1981 ("LOIA"), La.Rev.Stat.Ann. §
9:2780 (West 1991),2 applies to Dupre's accident as surrogate federal law under the Outer
Continental Shelf Lands Act ("OCSLA"), 43 U.S.C. §§ 1331-1356 (1988),3 and forbids enforcement
of the indemnity provision. In the alternative, Minatome argued that the indemnification provision
1
Section 14.9 of the contract between Penrod and Minatome states that Minatome "agrees to
protect, defend, indemnify, and save [Penrod] ... harmless from and against all claims, demands,
and causes of action of every kind and character." See Record on Appeal, vol. 1, at 38.
2
LOIA provides in part:
B. Any provision contained in, collateral to, or affecting an agreement pertaining
to a well for oil, gas, or water, or drilling for minerals ... is void and unenforceable
to the extent that it purports to or does provide for defense or indemnity, or either,
to the indemnitee against loss or liability for damages arising out of or resulting
from death or bodily injury to persons, which is caused by or results from the sole
or concurrent negligence or fault (strict liability) of the indemnitee, or an agent,
employee, or an independent contractor who is directly responsible to the
indemnitee.
La.Rev.Stat.Ann. § 9:2780 (West 1991).
3
OCSLA provides in part:
To the extent that they are applicable and not inconsistent with this Act or with
other Federal laws and regulations of the Secretary now in effect or hereafter
adopted, the civil and criminal laws of each adjacent State now in effect or
hereafter adopted, amended, or repealed are hereby declared to be the law of the
United States for that portion of the subsoil and seabed of the outer Continental
Shelf, and artificial islands and fixed structures erected thereon, which would be
within the area of the State if its boundaries were extended seaward to the outer
margin of the outer Continental Shelf.
43 U.S.C. § 1333(a)(2)(A) (1988).
in the contract is unenforceable under Texas law.4 In denying Minatome's motion, and granting
Penrod's motion for summary judgment, the district court concluded that (a) the contract is maritime
and (b) the indemnity provision in the contract is enforceable under Texas law. 788 F.Supp. 901.
Minatome filed a timely notice of appeal.
II
We review the district court's grant of a summary judgment motion de novo. Davis v. Illinois
Cent. R.R., 921 F.2d 616, 617-18 (5th Cir.1991). Summary judgment is appropriate if the record
discloses "that there is no genuine issue of material fact and that the moving party is entitled to a
judgment as a matter o f law." Fed.R.Civ.P. 56(c). The underlying facts of this action are not
disputed. Therefore, we are left with determining whether the district court erred, as a matter of law,
in interpreting the terms of the contract. Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578
(5th Cir.1986).
A
Minatome contends that Louisiana law applies under OCSLA, and forbids enforcement of
the indemnity provision. See Brief for Minatome at 8-15. We have articulated the following test for
deciding whether a case is governed by OCSLA:
[F]or adjacent state law to apply as surrogate federal law under OCSLA, three conditions are
significant. (1) The controversy must arise on a situs covered by OSCLA (i.e. the subsoil,
seabed, or artificial structures permanently or temporarily attached thereto). (2) Federal
maritime law must not apply of its own force. (3) The state law must not be inconsistent with
Federal law.
Smith v. Penrod Drilling Corp., 960 F.2d 456, 459 (5th Cir.1992) (quoting Union Texas Petroleum
Corp. v. PLT Eng'g, 895 F.2d 1043, 1047 (5th Cir.), cert. denied, 498 U.S. 848, 111 S.Ct. 136, 112
L.Ed.2d 103 (1990)); see also Rodrigue v. Aetna Casualty & Surety Co., 395 U.S. 352, 355-66, 89
S.Ct. 1835, 1836-42, 23 L.Ed.2d 360 (1969). Since we conclude that maritime law applies of its own
4
Minatome correctly acknowledged that if the contract is maritime, then Texas law governs
under the choice-of-law provision in the contract. See Stoot v. Fluor Drilling Services, Inc., 851
F.2d 1514, 1517 (5th Cir.1988) ("In the absence of a choice of law clause, the construction of
indemnity provisions in a contract involving maritime obligations is governed by maritime law.
However, under admiralty law, where the parties have included a choice of law clause, that state's
law will govern unless the state has no substantial relationship to the parties or the transaction or
the state's law conflicts with the fundamental purposes of maritime law." (citations omitted)).
force to this maritime contract, our discussion is limited to this issue.
What constitutes a maritime contract is a highly fact-specific inquiry, not determinable by
rubric. Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313, 316 (5th Cir.1990); see also Kossick
v. United Fruit Co., 365 U.S. 731, 742, 81 S.Ct. 886, 894, 6 L.Ed.2d 56 (1961) (resorting to the
observation that a contract is maritime if it has a "genuinely salty flavor"). We consider the following
six factors in making this fact-specific determination:
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? 5) what was the principal work of the injured worker? 6) what work
was the injured worker actually doing at the time of the injury?
Davis, 919 F.2d at 316; see also Smith, 960 F.2d at 460 (adopting Davis factors); Domingue v.
Ocean Drilling & Exploration Co., 923 F.2d 393, 395-96 (5th Cir.1991) (same), cert. denied, ---
U.S. ----, 112 S.Ct. 874, 116 L.Ed.2d 779 (1992).5
Applying the first Davis factor, we find that the contract specifically required Penrod to
provide Penrod 97, a special purpose offshore drilling vessel, for the purpose of drilling and
completing Minatome's wells G-1 through G-4, and for tying-back these wells to Minatome's fixed
offshore platform. See Record on Appeal, vol. 1, at 35, 39. Applying the second and third Davis
factors, we further find that Penrod's crew actually performed the obligations listed above while
aboard Penrod 97.
Regarding the fourth Davis factor—the relationship of the work to the mission of the
vessel—we initially note that a "contract related to oil and gas exploration and drilling takes on a salty
flavor when the performance of the contract is more than incidentally related to the execution of the
vessel's mission." Domingue, 923 F.2d at 396; see also Theriot v. Bay Drilling Corp., 783 F.2d 527,
538 (5th Cir.1986) ("Not every contract touching incidentally on a vessel will be maritime: "In order
5
Penrod contends that the Davis factors apply only when the contract is constantly redefined
by subsequent work orders, and that the factors are inapplicable in a single contract situation such
as the instant case. See Brief for Penrod at 13. This argument is unconvincing in light of two
recent decisions by this Court applying Davis to single contracts. See Campbell v. Sonat
Offshore Drilling, Inc., 979 F.2d 1115, 1119-21 (5th Cir.1992); Hollier v. Union Texas
Petroleum Corp., 972 F.2d 662, 663-65 (5th Cir.1992).
that such [maritime] character should attach, there must be a direct and proximate ... link between
the contract and the operation of a ship....' " (quoting 1 Benedict on Admiralty § 183 (7th ed. 1985))
(alteration in original)). Here, the contract did not merely touch incidentally on a vessel, but
specifically focused on the use of a vessel t o drill, complete, and tie-back Minatome's four wells.6
Minatome does not dispute that Penrod could not have performed its obligations under the contract
without the vessel. In addition, we have previously held that contracts for the supply and use of a
vessel for drilling and completing wells, and for general services connected therewith, are maritime
in nature. See Smith, 960 F.2d at 459-60 (holding that a contract for the supply and use of a vessel
for drilling, completion, and workover services was maritime); Lewis v. Glendel Drilling Co., 898
F.2d 1083, 1086 (5th Cir.1990) (stating that "contracts to drill a well offshore or to provide general
services in connection therewith are, when performed from a movable drilling platform, maritime
obligations"); Theriot, 783 F.2d at 538-39 (holding that a drilling contract which specifically
addressed the use of a vessel was maritime); see also Dupont v. Sandefer Oil & Gas, Inc., 963 F.2d
60, 62 (5th Cir.1992) (adopting holding in Smith ).7
The fifth and sixth Davis factors require that we inquire into the principal work of the injured
worker. In Davis, the principal work of the injured party was relevant in characterizing a work order
as maritime or nonmaritime, because the injured party was engaged in performing work required
6
Penrod specifically contracted to supply a jack-up drilling vessel, see Record on Appeal, vol.
1, at 39 (listing Penrod 97 as the main piece of equipment to be supplied), so that it could perform
the following:
A 4-pile, 16-slot platform will be installed. We plan to jack-up and cantilever over
the platform to tie-back and complete G-1.... Wells G-2 and G-3 will be tied back
and completed. Well G-4 will be tied back, deepened ... and completed. Wells G-
1, G-2 and G-3 are planned as dual completions.
See id. at 35.
7
Citing Union Texas, Thurmond v. Delta Well Surveyors, 836 F.2d 952 (5th Cir.1988), and
Laredo Offshore Constructors, Inc., v. Hunt Oil Co., 754 F.2d 1223 (1985), Minatome maintains
that the contract should be characterized as nonmaritime because the tying-back of wells to a
fixed offshore platform is a nonmaritime obligation. See Brief for Minatome at 9. Because the
contracts in those cases did not specifically require the supply and use of a vessel to perform
contractual services, we find those decisions distinguishable on their facts. See Dupont, 963 F.2d
at 62 (distinguishing Thurmond on the ground that the contract there did not "explicitly provide
for the supply and equipping of a vessel").
under the contract. See id., 919 F.2d at 317. Here, Dupre was injured while performing work
unrelated to the contract. See Record on Appeal, vol. 1, at 143. Therefore, the nature of his work
has little relevance to the task of characterizing the contract as maritime or nonmaritime. See
Domingue, 923 F.2d at 398 (finding fifth and sixth Davis factors irrelevant to characterizing contract
where injured party's work unrelated to contract).
Left with the application of the first four Davis factors, the most significant fact to emerge
is that the contract specifically focused on the supply and use of a vessel to drill and complete oil
wells on the outer continental shelf, and to perform general services therewith. Therefore, we hold
that our decisions in Smith, Lewis, and Theriot control our characterization of the contract, and that
the contract is accordingly maritime.
B
Both parties agree that if the contract is maritime, then the indemnity provision of the
contract must be construed according to Texas law. Minatome argues that under Texas law the
indemnity provision of the contract is unenforceable because the parties to the contract did not intend
for the indemnitee to seek indemnity for the consequences of its own negligence. See Brief for
Minatome at 16-19. In construing indemnity contracts, we apply the same rules of construction as
are applied to other contracts. Maxus Exploration v. Moran Bros., Inc., 773 S.W.2d 358, 363
(Tex.App.—Dallas 1989) (citing Ohio Oil Co. v. Smith, 365 S.W.2d 621, 627 (Tex.1963), overruled
on other grounds by Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705 (Tex.1987)), aff'd, 817
S.W.2d 50 (1991). We therefore must ascertain and give effect to the intentions of the parties as
expressed in the instrument. Spence & Howe Constr. Co. v. Gulf Oil Corp., 365 S.W.2d 631, 637
(Tex.1963), overruled on other grounds by Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705
(Tex.1987); see also Ohio Oil, 365 S.W.2d at 627. Where indemnitees seek indemnity for the
consequences of their own negligence, the intent of the parties must satisfy the express negligence
rule. Ethyl Corp., 725 S.W.2d at 708. "Under the doctrine of express negligence, the intent of the
parties must be specifically stated within the four corners of the contract." Id.
The indemnity provision in the contract between Penrod and Minatome provides the
following:
14.9 Operator's Indemnification of Contractor: Operator [Minatome] agrees to protect,
defend, indemnify, and save Contractor [Penrod], its officers, directors, employees and joint
owners harmless from and against all claims, demands, and causes of action of every kind and
character, without limit and without regard to the cause or causes thereof or the negligence
of any party or parties, arising in connection herewith in favor of Operator's employees....
Record on Appeal, vol. 1, at 38. We believe this language—in particular, the terms "without limit
and without regard to the cause or causes thereof or the negligence of any party or parties"—reflects
the parties' intention to allow the indemnitee to seek indemnity for the consequences of its own
negligence. See Maxus, 773 S.W.2d at 363 (upholding indemnity agreement containing identical
language); B-F-W Constr. Co., Inc. v. Garza, 748 S.W.2d 611, 614 (Tex.App.—Fort Worth 1988,
no writ) (holding as a matter of law t hat the language "regardless of cause or of any fault or
negligence of the contractor" meets the express negligence test); see also Atlantic Richfield v.
Petroleum Personnel, 768 S.W.2d 724, 726 (Tex.1989) (holding that the language "including but not
limited to any negligent act or omission" meets the express negligence test). Accordingly, we hold
that the intent of the parties satisfied the express negligence rule.
Minatome also contends that the injury sustained by Dupre was not covered by the indemnity
provision, since Dupre was injured while performing work unrelated to the contract between Penrod
and Minatome. See Brief for Minatome at 19 (citing Sun Oil Co. v. Renshaw Well Serv., Inc., 571
S.W.2d 64 (Tex.App.—Tyler 1978, no writ) and Westinghouse Elec. Corp. v. Childs-Bellows, 352
S.W.2d 806 (Tex.App.—Fort Worth 1961, no writ)). We disagree. The cases Minatome cites stand
for the proposition that an indemnity provision containing the phrases "arising out of" or "in
connection herewith" is not enforceable between a contractor and a subcontractor where the negligent
act resulting in injury is unrelated to the performance of the contract.8 See Sun Oil, 571 S.W.2d at
70-71; Childs-Bellows, 352 S.W.2d at 832. There is no question here that Dupre's injury resulted
from the negligence of Penrod in the performance of its contract. Dupre alleged that he slipped on
8
We further find limited precedential value in Sun Oil and Childs-Bellows, to the extent that
they apply the "clear and unequivocal" test for determining whether the parties to a contract
intended for the indemnitee to seek indemnity for the consequences of its own negligence. See
Ethyl Corp., 725 S.W.2d at 708 (rejecting clear and unequivocal test in favor of the express
negligence test).
mud discharged from Penrod 97, during Penrod's drilling operations. See Record on Appeal, vol. 1,
at 179-80. Consequently, Dupre's injury was covered by the indemnity provision, which states that
Minatome will indemnify Penrod from all claims, without regard to the negligence of any party,
"arising in connection herewith."
III
For the foregoing reasons, we AFFIRM.