United States Court of Appeals,
Fifth Circuit.
No. 94-40171.
LLOYDS OF LONDON, Plaintiff-Counter-Defendant-Appellee,
v.
TRANSCONTINENTAL GAS PIPE LINE CORPORATION, Defendant-Counter-
Claimant-Appellant.
Nov. 17, 1994.
Appeal from the United States District Court for the Western
District of Louisiana.
Before JOHNSON, HIGGINBOTHAM and DAVIS, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
At issue in this case is the applicability of the Louisiana
Oilfield Anti-Indemnity Act (the "LOAIA") to a contract involving
sandblasting and painting work on an interstate gas transmission
pipeline company's pipelines and platforms in the Gulf of Mexico.
Transcontinental Pipe Line Corporation ("Transco") appeals the
district court's grant of summary judgment in favor of Lloyds of
London. Because we conclude that the summary judgment evidence in
the record is insufficient to support the summary judgment, we
vacate the judgment and remand.
I.
Harrington Enterprises, Inc. ("Harrington") is a Louisiana
contractor engaged in providing sandblasting and painting services
in the offshore oilfields. Transco is a Texas corporation which
owns and operates natural gas pipelines throughout the United
States, including pipelines serving various producing platforms in
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the Gulf of Mexico off the Louisiana and Texas coasts. Transco
purchases gas from producers and transports it through its
pipelines for sale to eventual customers. Transco also transports
gas for others through its pipelines for a fee. Transco does not
produce any oil or gas.
In June 1987, Transco and Harrington entered into a contract
providing for Harrington to perform sandblasting and painting
services on Transco's offshore pipelines and equipment off the
Louisiana and Texas coasts. Specifically, the contract called for
Harrington to furnish:
Labor and equipment for sandblasting and painting platform
structures and platform piping [and] also to furnish labor and
equipment to perform various operations and maintenance
functions as directed by [Transco's] authorized
representative.
The contract also called for Harrington "to protect, indemnify and
save [Transco] harmless from and against all claims, demands, and
causes of action of every kind and character arising in favor of
[Harrington's] employees" and to list Transco as an additional
assured in a comprehensive general liability policy issued to
Harrington by a consortium of insurance companies (hereinafter
"Lloyds").
This action arose from a personal injury suffered by Carl
Fontenot, a Harrington employee. Fontenot allegedly fell from the
top of a sandpot to the deck of a boat while sandblasting and
painting a Transco riser located on a structure in Block 133 of the
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Brazos area.1 The boat was tied to the 133 "A" platform, which at
that time was owned and operated by Cities Service Oil Co., Inc.
("Cities"). Cities owned and operated seven producing wells on 133
"A" that provided gas to the Transco pipelines passing over the
platform.
On the 133 "A" platform, Transco owned and maintained three
incoming pipelines, a meter station, and two outgoing pipelines
which tied into the Transco Central Texas lateral pipeline. The
three incoming pipelines carried gas from fifty-six wells upstream
of the platform. The gas from these fifty-six wells had been
commingled and carried through the Transco pipeline to 133 "A,"
where it was further commingled with the gas from the seven Cities
wells. Before the gas from the Cities wells was commingled with
the upstream gas, it was measured through Transco's meter located
on the 133 "A" platform. Ownership of the gas changed hands at the
meter when the gas was measured. The gas was commingled with the
gas from the upstream wells immediately after it passed through the
meter.
Transco demanded that Harrington and its insurer defend and
indemnify Transco for the injuries. Lloyds denied Transco's claim
for defense and indemnity and filed this suit for declaratory
judgment in the district court, alleging that the LOAIA rendered
the indemnity provisions null and void. Transco responded with a
1
Although Fontenot's injury occurred adjacent to a platform
off the Texas coast, both parties and the district court
consistently applied Louisiana law and never questioned its
applicability. See Johnson v. Amoco Production Co., 5 F.3d 949,
951 n. 2 (5th Cir.1993).
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reconventional demand against Lloyds, seeking a defense to and
indemnity from Fontenot's action. Both parties then filed
cross-motions for summary judgment.
In accordance with 28 U.S.C. § 636(B)(1)(b), the district
court referred the motions to a magistrate judge for review, report
and recommendation. After thorough review and analysis, the
magistrate judge concluded that the LOAIA applied and that the
Transco indemnity provision was unenforceable. Upon de novo
review, the district court accepted the magistrate judge's
recommendation and granted Lloyds' motion for summary judgment and
denied Transco's motion, 847 F.Supp. 48. Transco timely appealed.
II.
This court reviews a grant of summary judgment under the same
standard that guided the district court. Walker v. Sears, Roebuck
& Co., 853 F.2d 355, 358 (5th Cir.1988). The sole issue to be
resolved is the applicability of the LOAIA to the indemnity
provision contained in the contract between Harrington and Transco.
The Louisiana legislature enacted the LOAIA to declare a large
class of hold harmless/indemnity agreements unenforceable. It
reasoned "that an inequity is foisted on certain contractors and
their employees by the defense or indemnity provisions, either or
both, contained in some agreements pertaining to wells for oil,
gas, or water, or drilling for minerals." La.Rev.Stat.Ann. §
9:2780(A) (West 1991). The LOAIA defines "agreement" as "any
agreement or understanding, written or oral, concerning any
operations related to the exploration, development, production, or
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transportation of oil, gas, or water, or drilling for minerals."
Id. § 9:2780(C).
This court considered the application of the LOAIA to
transmission companies in Transcontinental Gas Pipe Line Corp. v.
Transportation Ins. Co., 953 F.2d 985 (5th Cir.1992). That case
also involved an employee who was injured while performing
sandblasting and painting work pursuant to a contract on an
offshore junction platform owned by Transco. Although it rejected
Transco's argument that the LOAIA did not apply to transmission
companies per se, this court refused to read the statute so broadly
as to cover every agreement arising from or connected with the
transportation of gas and oil. Id. at 992. Instead, the court
interpreted the LOAIA to apply only to the limited subset of those
agreements related to the transportation of gas that pertain to a
well. Id.
The Transco court established a two-step process for
determining the applicability of the LOAIA. First, as a threshold
matter, the contract must "pertain to a well." Id. at 991.
Second, the contract must be related to the exploration,
development, production or transportation of oil, gas or water.
Id. The sole dispute in this case is whether the contract
"pertains to a well." We concluded in Transco that the
determination of "whether a contract pertains to a well ...
requires a fact intensive case-by-case analysis." Id. at 994. The
focus of this inquiry is the location of the work required by the
contract. The LOAIA is not applicable if the work required by the
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contract is performed on gas transmission equipment at "a
reasonably determinable point at which the gas can no longer be
identified with a particular well, or is so fundamentally changed
in processing, commingling, or preparing it for distribution to its
ultimate end user, that the gas no longer "pertains to a well.' "
Id. The Transco court listed ten non-inclusive factors relevant to
this determination.2
2
Those factors are:
(1) whether the structures or facilities to which the
contract applies or with which it is associated, e.g.,
production platforms, pipelines, junction platforms,
etc., are part of an in-field gas gathering system;
(2) what is the geographical location of the facility
or system relative to the well or wells;
(3) whether the structure in question is a pipeline or
is closely involved with a pipeline;
(4) if so, whether that line picks up gas from a single
well or a single production platform or instead carries
commingled gas originating from different wells or
production facilities;
(5) whether the pipeline is a main transmission or
trunk line;
(6) what is the location of the facility or structure
relative to compressors, regulating stations,
processing facilities or the like;
(7) what is the purpose or function of the facility in
question;
(8) what if any facilities or processes intervene
between the wellhead and the structure or facility in
question, e.g., "heater treaters," compressor
facilities, separators, gauging installations,
treatment plants, etc.;
(9) who owns and operates the facility or structure in
question, and who owns and operates the well or wells
that produce the gas in question;
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Applying Transco, the district court identified the meter on
the 133 "A" platform as the last reasonably determinable point
before the gas became unrecognizable to the wells on the platform.
The district court held that because the contract envisioned that
Harrington would perform work on the meter, the contract pertained
to a well. Transco argues that the district court erred on a
number of grounds.
Transco first argues that the court improperly focused on the
site of the accident, the 133 "A" platform, in determining that the
contract pertained to a well. Transco contends that by limiting
its analysis to one platform, the court did not consider the entire
contract, which pertained to numerous facilities in two states.
The district court's focus on the 133 "A" platform was not
improper. The district court was charged with determining whether
the contract—which called in broad general terms for Harrington to
perform work on platform structures and piping—pertained to a well.
The platform on which Fontenot was working when he was injured was
a logical beginning point. We cannot fault the district court's
reasoning that if Harrington's work on the 133 "A" platform
pertained to a well, the LOAIA was triggered. The court did not
need to look further to see if the contract pertained to any other
wells. Transco instructs us to examine the facts to see if the
(10) and any number of other details affecting the
functional and geographic nexus between "a well" and
the structure or facility that is the object of the
agreement under scrutiny.
Id. at 995.
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contract envisioned work which pertained to any well. The fact
that the contract also may pertain to numerous other wells or to
objects other than wells is of no consequence.
Transco next challenges the district court's determination
that the meter was the last reasonably determinable point before
the gas could no longer be identified with a particular well.
However, an application of the Transco factors supports this
determination. Under Transco, the seven wells on the 133 "A"
platform constituted one well for purposes of the LOAIA. See id.
at 995 n. 40; see also Nerco Oil & Gas, Inc. v. M.R. Friday, Inc.,
816 F.Supp. 429, 431 (W.D. La.1993). These wells fed gas through
piping owned by Cities into the Transco meter. The gas was not
treated before reaching the meter, except to bring it up to
pipeline standards. The purpose of the meter was to measure the
gas directly from producing wells on the 133 "A" platform before it
entered the transmission pipeline. This gas was not commingled
with gas from other wells until after it passed through the meter.
Thus, there was a sufficient functional and geographical nexus
between the producing wells on 133 "A" and the meter.
Finally, Transco contends that even if we agree with the
district court's focus on the 133 "A" meter, the summary judgment
evidence does not support the conclusion that the contract
contemplated that work would be performed on the meter. Meters are
not referred to in the contract. The district court therefore had
the task of determining from the summary judgment evidence whether
the parties contemplated that Harrington would sandblast or paint
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the meter on platform 133 "A." The sole evidence relating to work
on the 133 "A" meter is the affidavit of Winfard Terme, the
District Manager of Transco. According to Mr. Terme, the meter was
housed inside a small building on the platform and would ordinarily
be hand painted by a Transco employee. Mr. Terme also examined the
invoices from the Harrington job and concluded that no work had
been done on the 133 "A" meter.
The district court concluded that the absence of work by
Harrington on the 133 "A" meter was insufficient to show that the
contract did not envision that work could be performed on the
meter. The court interpreted the contract's requirement of
"sandblasting and painting platform structures and platform piping"
to include the meter, since 133 "A" is a platform structure and
does contain a meter.3
We do not read the contract as calling for Harrington to
sandblast and paint all structures and piping on the platforms. To
the contrary, Harrington could perform only the work it was
directed to perform by Transco. Transco produced summary judgment
evidence that Harrington did not work on the platform 133 "A" meter
and ordinarily would not do so. Transco therefore successfully
established by summary judgment evidence that the contract did not
contemplate work on the meter. Because this determination was
3
At oral argument, counsel for Lloyds suggested that the
contract also envisioned that work would be performed on pipes
upstream of the meter—i.e., on the piping which transported gas
from the Cities wells to the meter. However, that piping was
owned by Cities and thus was not covered by the Transco contract.
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critical to the district court's conclusion that Harrington's work
pertained to a well, we must vacate the summary judgment and remand
this case for further proceedings.
III.
For the foregoing reasons, we vacate the district court's
entry of summary judgment for Lloyds and remand this case to the
district court for further proceedings consistent with this
opinion.
VACATED AND REMANDED.
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