IN RE LARRY DOIRON INC.: REFRAMING THE MARITIME CONTRACT ANALYSIS.

Author:Reagin, Patrick
 
FREE EXCERPT

TABLE OF CONTENTS I. Facts and Holding 410 II. Background 414 A. The Beginning: Davis & Sons, Inc 414 B. The Aftermath: Confusion and Kirby 418 III. The Court's Decision 420 A. The Davis & Sons Factors 420 B. Reform Under Kirby 422 C. Reframing and Application in Doiron 422 IV. Analysis 423 V. Conclusion 425 I. FACTS AND HOLDING

On February 25, 2011, Peter Savoie, an employee of Specialty Rental Tool & Supply, LLP ("STS"), was injured by the negligent operation of a crane during "flow back" (1) services on a fixed production platform located in navigable waters in West Lake Verret in Louisiana's Atchafalaya Basin. (2) The platform was owned by Apache Corporation ("Apache"). (3) Apache hired STS to provide oilfield services to its production platforms pursuant to an October 12, 2005, Master Services Contract ("MSC"). (4) As is common in the oil patch, the general terms of the MSC were incorporated into later work orders calling for the performance of specific services. (5)

The day before Savoie's injury, Apache issued an oral work order to STS calling for the provision of flow-back services to the platform in question. (6) STS dispatched Savoie and Matthew Delahoussaye to the platform who unsuccessfully attempted the flow-back operation. (7) The STS employees reported that heavier equipment was needed for the job. (8) Savoie further advised that the necessary equipment would require the use of a crane barge because it would be too heavy for the STS workers to remove from the wellhead themselves. (9) Accordingly, Apache hired Larry Doiron, Inc. ("LDI") to provide the requested crane barge in facilitation of the operation. (10)

Savoie and Delahoussaye returned to the Apache platform the following day to re-attempt the flow-back job. (11) Despite the use of the crane barge and larger equipment, the job was again unsuccessful. (12) Savoie advised Apache that a coiled tubing unit would be necessary, and the flow-back job was terminated. (13) Savoie and Delahoussaye began the process of removing the flow-back equipment using the crane. (14) As Savoie directed the LDI crane operator to "boom down", the load was dropped too fast, knocking Savoie off balance. (15) To avoid a steep fall, Savoie grabbed hold of the equipment the crane was moving and directed the crane operator to put him down on the crane barge. (16) In transit, Savoie lost his grip and fell approximately eight feet to the deck of the crane barge, crushing his right leg. (17)

Anticipating a personal injury claim from Savoie, LDI, in its capacity as owner of the crane barge, initiated limitation of liability proceedings in the United States District Court for the Western District of Louisiana. (18) On September 30, 2011, Savoie filed a claim in the LDI limitation proceedings alleging negligence of the LDI crane operator. (19) On August 16, 2012, LDI made a formal demand upon STS to defend, indemnify, and hold LDI harmless against Savoie's claim pursuant to the indemnity provision of the MSC. (20) That provision required STS to defend and indemnify Apache and its contractors (like LDI) from claims asserted by STS employees for bodily injury arising out of the work performed under the agreement. (21) STS rejected Apache's demand, and the parties filed cross-motions for summary judgment. (22)

The question before the district court was whether the Apache/STS MSC was a "maritime contract." (23) If so, the indemnity provision was enforceable, and STS owed LDI defense and indemnity from Savoie's claim. (24) If not, Louisiana law governed, and the Louisiana Oilfield Indemnity Act rendered the provision void and unenforceable. (20)

To analyze the MSC, the district court applied the test set forth in Davis & Sons, Inc. v. Gulf Oil Corp. (26) That test required the court first to examine the historical treatment in the jurisprudence of the type of work order at issue in the case. (27) Where the historical treatment was not sufficiently established, the court was next tasked with applying a six-factor analysis:

1) what did 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? and 6) what work was the injured worker actually doing at the time of injury? (28)

The district court concluded that, although the historical treatment of flow-back services was inconclusive, the contract was maritime in nature; the court relied heavily on the fact that the operation in question could not have been completed without the use of the crane barge. (29) Thus, general maritime law governed, the indemnity provision was enforceable, and the district court granted summary judgment in favor of LDI and denied STS's motion. (30)

STS appealed to the United States Fifth Circuit Court of Appeals, arguing that the district court erred in its application of the Davis factors and that the MSC was not a maritime contract. (31) The Fifth Circuit panel concluded that the district court properly applied the Davis & Sons test, and affirmed the ruling in favor of LDI. (32) Importantly, however, Judge Davis concurred separately, joined by Judge Southwick, urging that the case be heard en banc to simplify the multi-factor Davis & Sons maritime contract test, which had been consistently criticized by courts in the Fifth Circuit and brought into question by later Supreme Court jurisprudence. (33)

On July 7, 2017, the Fifth Circuit granted rehearing en banc. (34) Following briefing and oral argument, the court held that a new two-factor test applies in the Fifth Circuit to determine maritime contract status:

First, is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters?

Second, if the answer... is "yes," does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract? If so, the contract is maritime in nature. (35)

Applying the new streamlined test, the en banc Fifth Circuit unanimously concluded that the MSC was not a maritime contract. (36) The contract was governed by Louisiana law. (37) Therefore, the indemnity provision was unenforceable and the district court's grant of summary judgment in LDI's favor was reversed. (38)

  1. BACKGROUND

    In re Larry Doiron Inc.'s significance is its reframing of the maritime contract analysis originally developed in Davis & Sons, Inc. u. Gulf Oil Corp. (39) A contextual understanding of Doiron therefore begins with a review of Davis & Sons.

    1. The Beginning: Davis & Sons, Inc.

      In 1981, Davis & Sons, Inc. (Davis), an offshore services contractor, entered into a Master Service Agreement (MSA) with Gulf Oil Corporation (Gulf Oil) to provide labor and general contracting services to Gulfs Eastern offshore and onshore area facilities. (40) The MSA included an indemnity clause requiring Davis to "protect, indemnify and save Gulf Oil harmless from and against all claims, demands and causes of actions, suits or other litigation" that might arise out of the contractual relationship. (41)

      Pursuant to the terms of the MSA, Gulf Oil from time to time issued work orders directing Davis to provide labor and maintenance in Black Bay Field, an area in Louisiana's Plaquemines Parish where Gulf operated natural gas and crude oil wells. (42) Maintenance on Gulf Oil's Black Bay Field wells was achieved primarily through the use of self-propelled barges equipped with "spuds" to anchor the barges in a given work location. (43)

      Pursuant to weekly work orders, Davis supplied labor from two land-based barge crews. (44) In addition to their oilfield labor duties, the Davis crews manned the barges and were responsible for barge maintenance. (45) Mark P. Brenaman, a Davis employee, was assigned to supervise one of the Davis barge crews. (46)

      On July 2, 1982, Brenaman drowned while assigned to work on one of the Davis barges. (47) Although the exact circumstances surrounding Brenaman's death are unknown, on the day of the accident, the barge in question was spudded down adjacent to one of Gulf Oil's fixed production platforms and working pursuant to a Gulf Oil-issued work order. (48) Brenaman was both supervising the barge crew's work relative to the...

To continue reading

FREE SIGN UP