Baloney v. Ensco, Inc. et al
Filing
105
ORDER AND REASONS denying Bayou's 54 Motion for Summary Judgment; denying Bayou's 56 Motion for Summary Judgment; granting Stone's 65 Cross-Motion for Summary Judgment; granting Ensco's 70 Cross-Motion for Summary Judgment. Signed by Judge Jane Triche Milazzo. (ecm, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
DARNELL DEON BALONEY
CIVIL ACTION
VERSUS
NO. 11‐2730
ENSCO, INC., ET AL.
SECTION “H” (2)
ORDER AND REASONS
There are four Motions for Summary Judgment before the Court: a Motion for Summary
Judgment to Dismiss the Third Party Complaint of Ensco Offshore Company filed by Bayou
Inspection Services, Inc. ("Bayou") (Doc. 54); a Cross Motion for Summary Judgment filed by Ensco
Offshore Company ("Ensco") (Doc. 70); a Motion for Summary Judgment to Dismiss the Third Party
Complaint of Stone Offshore Energy, LLC filed by Bayou (Doc. 56); and a Cross Motion for Summary
Judgment filed by Stone Offshore Energy, LLC ("Stone") (Doc. 65). For the following reasons,
Bayou's Motion for Summary Judgment against Ensco (Doc. 54) is DENIED, Ensco's Cross‐Motion
‐1‐
for Summary Judgment against Bayou (Doc. 70) is GRANTED, Bayou's Motion for Summary
Judgment against Stone (Doc. 56) is DENIED, and Stone's Cross‐Motion for Summary Judgment
(Doc. 65) is GRANTED.
BACKGROUND
I.
Factual Background
On November 16, 2010 Darnell Baloney ("Baloney"), a Non‐Destructive Testing
Trainee/Helper, was working aboard the ENSCO 99. In order to perform x‐ray and magnetic testing
on a crane located on the ENSCO 99, Baloney worked from a suspended metal personnel basket
attached to another crane on the ENSCO 99. While suspended, the crane operator allegedly caused
Baloney's metal personnel basket to strike the crane's cable thereby causing the basket to tilt and
jerk. As a result, Baloney alleges that he sustained injuries.
At the time of the alleged incident, Baloney was an employee of Bayou. Bayou performs
non‐destructive x‐ray and magnetic particle testing on welded surfaces. The services provided by
Bayou are performed onsite at client facilities both onshore and offshore.
Bayou was performing work on the ENSCO 99 pursuant to an "Agreement for the
Performance of Services and Provision of Goods and Facilities" ("Bayou‐Ensco Agreement") entered
into between Bayou and Ensco. The Bayou‐Ensco Agreement provides that Bayou may provide
goods or services to support Ensco's operations of offshore drilling rigs and offshore supply/AHTS
‐2‐
vessels. The Bayou‐Ensco Agreement states that any Bayou‐Ensco transaction shall be covered by
a specific "Work Order" or "Purchase Order."
Under the Bayou‐Ensco Agreement, Ensco placed a verbal work. Ensco requested that
Bayou inspect the welds of a drilling pipeline and crane boom located on the ENSCO 99. The verbal
work order requested the use of x‐ray photography and magnetic particle testing. In order to
complete the verbal work order, Bayou assigned Baloney and Paul Brummet ("Brummet") to the
ENSCO 99.
The ENSCO 99 is a vessel owned and operated by Ensco pursuant to a contract with Stone.
More specifically, the ENSCO 99 is a "mobile offshore drilling unit" ("MODU") that is commonly
referred to as a "jack‐up rig." On November 16, 2010, the ENSCO 99 was jacked up and temporarily
affixed to the Outer Continental Shelf at "Ship Shoal Block 93."
II.
Procedural Background
Baloney filed suit against Ensco and Stone on November 2, 2011 alleging negligence under
general maritime law. (Doc. 1.) Stone filed a Third Party Complaint against Bayou on February 14,
2012 asserting that, pursuant to a Stone‐Bayou General Work Agreement, Bayou agreed to protect,
defend, and indemnify Stone from the claims underlying the instant matter. (Doc. 10.) Stone later
amended its Third Party Demand. (Doc. 25.) On May 29, 2012 Ensco filed a Third Party Complaint
against Bayou contending that Bayou is required to protect, defend, and indemnify Ensco from and
against any and all claims for injuries of Bayou employees. (Doc. 30.)
‐3‐
On October 24, 2012 Stone filed a Motion for Summary Judgment requesting dismissal of
Plaintiff's claims. (Doc. 47.) On November 29, 2012 the Court granted Stone's Motion for Summary
Judgment. (Doc. 52.) Stone remained in the instant matter only as a Third Party Complainant
against Bayou.
On December 7, 2012 Bayou filed a Motion for Summary Judgment to Dismiss Ensco's Third
Party Complaint (Doc. 54) and Stone's Third Party Complaint (Doc. 56). Stone filed a Cross Motion
for Summary Judgment on December 21, 2012. (Doc. 65.) Ensco filed a Cross Motion for Summary
Judgment on December 31, 2012. (Doc. 70.) On January 30, 2013 the Court heard oral argument
on these Motions. (Doc. 82.) The Court took the Motions under submission at that time, and now
enters its ruling.
LEGAL STANDARD
Summary judgment is appropriate “[i]f the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c). A genuine issue of fact exists only “[i]f the evidence is such that
a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).
In determining whether the movant is entitled to summary judgment, the Court views facts
‐4‐
in the light most favorable to the nonmovant and draws all reasonable inferences in his favor.
Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528 (5th Cir.1997). “If the moving party meets the
initial burden of showing that there is no genuine issue of material fact, the burden shifts to the
non‐moving party to produce evidence or designate specific facts showing the existence of a
genuine issue for trial.” Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th
Cir.1995). Summary judgment is appropriate if the non‐movant “[f]ails to make a showing sufficient
to establish the existence of an element essential to that party's case....” Celotex Corp. v. Catrett,
477 U.S. 317,324 (1986). “In response to a properly supported motion for summary judgment, the
nonmovant must identify specific evidence in the record and articulate the manner in which that
evidence supports that party's claim, and such evidence must be sufficient to sustain a finding in
favor of the nonmovant on all issues as to which the nonmovant would bear the burden of proof
at trial. John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293,301 (5th Cir.2004)
(internal citations omitted). “We do not ... in the absence of any proof, assume that the nonmoving
party could or would prove the necessary facts.” Badon v. RJR Nabisco, Inc., 224 F.3d 382,394 (5th
Cir.2000) (quoting Little v. Liquid Air Corp., 37 F.3d 1069,1075 (5th Cir.1994)). Additionally, “[t]he
mere argued existence of a factual dispute will not defeat an otherwise properly supported
motion.” Boudreaux v. Banctec, Inc., 366F.Supp.2d 425, 430 (E.D. La. 2005).
‐5‐
LAW AND DISCUSSION
Before the Court are four Motions for Summary Judgment. The Motions request the Court
to determine, as a matter of law, whether the Bayou‐Ensco Agreement is a maritime or non‐
maritime contract.
For the reasons that follow, the Court finds that the Bayou‐Ensco Agreement is a maritime
contract. Accordingly, maritime law applies to the Bayou‐Ensco Agreement and ousts any
application of the Outer Continental Shelf Lands Act, which adopts state law. Because general
maritime law applies, the indemnity provisions in the Bayou‐Ensco Agreement are valid and
enforceable. Based on these findings, Bayou's two Motions for Summary Judgment are denied,
Ensco's Motion for Summary Judgment is granted, and Stone's Motion for Summary Judgment is
granted.
I.
Arguments of the Parties
Bayou maintains that the Bayou‐Ensco Agreement is a non‐maritime contract. Because the
Bayou‐Ensco Agreement is a non‐maritime contract, Bayou contends that the Outer Continental
Shelf Lands Act ("OCSLA") applies and Louisiana law will act as surrogate state law. When Louisiana
law applies, Bayou alleges that the Louisiana Oilfield Anti‐Indemnity Act ("LOAIA") will apply
thereby rendering the indemnity provisions in the Bayou‐Ensco Agreement unenforceable.
Accordingly, Bayou requests the Court to dismiss the claims of both Stone and Ensco.
Stone and Ensco argue that the Bayou‐Ensco Agreement is a maritime contract, because
‐6‐
it pertains to the services of a vessel, namely the ENSCO 99. Stone and Ensco conclude that, under
maritime law, indemnity provisions, such as the ones found in the Bayou‐Ensco Agreement, are
routinely upheld and enforceable. As such, Stone and Ensco request the Court to grant their
summary judgment.
II.
Whether the Bayou‐Ensco Agreement is a Maritime Contract
The first issue that the Court must decide is whether the Bayou‐Ensco Agreement is a
maritime contract. See Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778, 789 n.9 (5th
Cir. 2009) (“in determining whether state law applies in an OCSLA action, predicated on a contract,
it is permissible to consider whether the contract at issue is a maritime contract before considering
whether OCSLA situs has been established”). For the reasons that follow the Court finds that the
Bayou‐Ensco Agreement is a maritime contract. Accordingly, the Court pretermits any discussion
as to the applicability of OCSLA in this matter.
In determining whether a contract is maritime, the Court’s consideration is two‐fold. Davis
and Sons, Inc. v. Gulf Oil Corporation, 919 F.2d 313 (5th Cir. 1990), reh’g denied, 924 F.2d 1054
(1991). Specifically, a court must analyze the historical treatment of similar contracts in the
jurisprudence and also make a fact‐specific inquiry. Davis, 919 F.2d at 316. If the historical
treatment is dispositive then a court is directed to make a fact‐specific inquiry. When making this
inquiry, courts must analyze these six factors: (1) what does the specific work order in effect at the
time of the injury provide; (2) what work did the crew assigned under the work order actually do;
‐7‐
(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 the 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 the injury. Id. "The
maritime or non‐maritime status of the contract ultimately depends on its 'nature and character,'
not on its place of execution or performance." Hoda v. Rowan Companies, Inc., 419 F.3d 379, 381
(5th Cir. 2005) (quoting Davis, 919 F.2d at 316).
A.
Historical Treatment of Similar Contracts
The Fifth Circuit has recognized that there are "[i]nherent 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." Hoda, 419 F.3d at 382. When services are peculiar to the
oil and gas industry, and not maritime commerce, then these do not constitute maritime contracts.
See id. On the other hand, when the obligation underlying the contract is inextricably intertwined
with the activities of the vessel and could not be performed without the vessel's direct
involvement, then there is a strong basis for finding a maritime contract. Id.
Specific to the instant matter, the fact that a jack‐up drilling rig is a vessel is not dispositive
of the nature or character of the contract. Domingue v. Ocean Drilling & Exploration Co., 923 F.2d
393, 397 (5th Cir. 1991). In turn, the courts' interpretations of contracts involving work on jack‐up
rigs has been fluent. In some instances, courts have found that, although the obligation under the
contract was inherently non‐maritime in nature, the contract was maritime because the use of the
‐8‐
rig‐vessel was central to the work performed under the contract.1 Other courts, however, have
found that a non‐maritime obligation forms a non‐maritime contract, regardless of the fact that
the work was performed on a rig‐vessel.2
Thus, neither the fact that a contract calls for services to be performed on a jack‐up drilling
rig, a vessel, nor the fact that such services are traditionally non‐maritime is determinative. See
Energy XXI, GoM, LLC v. New Tech Engineering, L.P., 787 F. Supp. 2d 590, 601–02 (S.D. Tex. 2011).
An analysis of the historical treatment may sometimes be clear enough to make a determination
of the contract without necessitating the Court to assess the contract further. Hoda, 419 F.3d at
1
See, e.g., Campbell v. Sonat Offshore Drilling, Inc., 979 F.2d 115, 1123 (5th Cir. 1992) (a contract
using a jack‐up rig to accomplish drilling oil and gas wells is maritime); Hoda, 419 F.3d at 382
(torquing up and down blowout preventer stacks on a jack‐up rig is maritime in nature); Devon La.
Corp. v. Petra Consultants, Inc. 247 F. App'x 539, 545 (5th Cir. 2007) (while the torquing of bolts on
blowout preventer stacks does not require the use of the vessel or its crew, the work would have
been irrelevant and impossible if the vessel's rig was not used and therefore the contract is
maritime); Lopez v. Magnolia Industrial Fabricators, No. 05‐0371, 2006 WL 2850447, at *4 (E.D. La.
Oct. 3, 2006) (the contract for crane inspection services on a jack‐up drilling rig is maritime);
Demette v. Falcon Drilling Co., Inc., 280 F.2d 492 (5th Cir. 2002) (when the work being performed
is integral to the primary purpose of the vessel then the contract is maritime); Diamond Offshore
Co. v. A&B Builders, Inc., 75 F. Supp. 2d 676, 680 (5th Cir. 1999) (welding a pollution pan onto a
semi‐submersible drilling rig, a vessel, so that it would be fit to perform its function of offshore oil
exploration is considered a vessel repair which is maritime in nature).
2
Domingue v. Ocean Drilling and Exploration Co., 923 F.2d 393 (5th Cir. 1991) (when a vessel only
serves as a work platform to perform services that are peculiar to the oil and gas industry then the
contract is non‐maritime); Thurmond v. Delta Well Surveyors, 836 F.2d 952 (5th Cir. 1988) (the use
of a work barge was only incidental to the performance of the contract and therefore the contract
was maritime)
‐9‐
381 (citing Demette, 280 F.3d at 500). This is not the case here. While the Court acknowledges the
significant precedent weighing in favor of finding the Bayou‐Ensco Agreement is a maritime
contract, the Court feels that further analysis is needed. Accordingly, the Court analyzes the Davis
factors.
B.
The Davis Factors
In Davis, the Court interpreted a Master Service Agreement ("MSA") whereby the
contractor would provide labor and general contracting services. Davis, 919 F.2d at 314. The MSA
did not further specify any work to be performed. Id. The work to be performed was provided in
later, periodic work orders calling for the performance of specific services. Id. This Court finds that
the situation in this case is substantially similar to that presented to the Davis Court. Thus, where
the contract consists of both a MSA (in this case the Bayou‐Ensco Agreement) and subsequent
work order(s), the two must be interpreted together in evaluating whether the contract is a
maritime contract. Davis, 919 F.2d at 315.
The first Davis factor requires the Court to consider the specific work order in effect at the
time of the injury. In this case, a verbal work order contracted Bayou to perform x‐ray and
magnetic particle testing on a drilling pipe and crane aboard the ENSCO 99. (Doc. 64‐4.) The court
in Lopez found that a contract calling for the maintenance and inspection of a crane located on a
jack‐up rig is "[p]roperly categorized as work on an appurtenance of a vessel." Lopez, 2006 WL
2850447, at *4; see also Diamond Offshore Co., 302 F.3d at 550 (a work order for welding and
‐10‐
supplying labor and materials to repair a semi‐submersible drilling rig is maritime). Similarly, the
work order here deals with a necessary part of the jack‐up rig. Accordingly, this factor weighs in
favor of the Bayou‐Ensco Agreement being a maritime contract.
The second factor requires the Court to analyze what work the crew assigned under the
work order actually did. Bayou assigned Brummet and Baloney to perform inspection and repair
services to the cranes and drilling pipes of the ENSCO 99. At the time of Baloney's accident,
Baloney was performing x‐ray work and magnetic testing on a crane located on the ENSCO 99.
(Doc. 54‐2 at 33‐34.) Courts are consistent in holding that repair services to a vessel are maritime
in nature. See Diamond Offshore Co., 302 F.3d at 549 ("contracts for vessel repair services are
traditionally treated as maritime"). Accordingly, the Court finds that this factor militates a in favor
of a maritime contract.
The third factor asks the Court to consider whether the crew was assigned to work aboard
a vessel in navigable waters. It is without a doubt that a jack‐up rig is considered a vessel. See
Demette, 280 F.3d at 498, n. 18 ("[t]his circuit has repeatedly held that special‐purpose movable
drilling rigs, including jack‐up rigs, are vessels within the meaning of admiralty law"). Accordingly,
this factor favors a finding that the Bayou‐Ensco Agreement is a maritime contract.
Under the fourth factor, the Court must question the extent to which the work being done
was related to the mission of the vessel. Bayou contends that because the work Baloney was
performing did not relate to the navigation function of the vessel. Stone and Ensco, however,
‐11‐
assert that inspection of the crane is specifically related to the mission of the vessel. Specifically,
they argue that the vessel cannot perform its intended function of drilling if the crane is
malfunctioning.
Bayou cites to no authority, nor can this Court find any, that requires the work to be related
to the navigation of the vessel. On the other hand, several courts have found that a crane is an
integral instrument for drilling, which is the primary purpose of a jack‐up rig. Moreover, the ENSCO
99 is not a mere work platform, but a vessel that has been jacked‐up for the purpose of exploration
and drilling. The crane work on the ENSCO 99 is essential to its functionality and accordingly, its
mission. In turn, the Court finds that this factor weighs in favor of the Bayou‐Ensco Agreement
being characterized as a maritime contract.
The fifth and sixth factors related to the tasks of the injured worker. Specifically, the Court
must assess the principal work of the injured worker and what the injured worker was doing at the
time of the alleged injury. Baloney's primary task was to perform x‐ray and magnetic testing
services on the cranes and drill pipes of the ENSCO 99. He was working from a personnel basket
performing these inspection services on one of the ENSCO 99 cranes at the time of the accident.
As such, his principal work related directly to the mission of the vessel, and he was performing this
work at the time of the incident. Accordingly, these two factors weigh in favor of the Bayou‐Ensco
Agreement being a maritime contract.
Ultimately, there is no broad characterization whereby oil and gas services contracts are
‐12‐
maritime whenever they contribute to the mission of a jack‐up drilling rig. See Hoda, 419 F.3d at
383. Accordingly, courts are directed to make a fact‐specific inquiry. Based on the facts of this case
the Court finds that the Bayou‐Ensco Agreement is indeed a maritime contract.
III.
Indemnity Provisions
Because the Bayou‐Ensco Agreement is a maritime contract, the contract's indemnity
provisions are enforceable under maritime law. See Hoda, 419 F.3d at 383. Accordingly, both
Ensco and Stone are entitled to indemnity in the instant matter.
The indemnity claims made by Stone and Ensco arise under from the Bayou‐Ensco
Agreement. The Bayou‐Ensco Agreement provides the following indemnity provision:
Contractor [Bayou] agrees to be responsible for, protect, defend, release, indemnify
and hold Company [Ensco], its parent, subsidiaries, associated or affiliated
companies, and their respective shareholders, directors, officers, employees,
insurers, servants and agents, free and harmless from and against any and all losses,
costs, claims, causes of action and liabilities (including, without limitation, the costs
of suit and reasonable attorney's fees) arising in favor of any party on account of
injury to, or death of, or damage to or loss of property of Contractor [Bayou], its
parent, subsidiaries, associated or affiliated companies, its contractors or sub‐
contractors of Contractor, and each of their respective shareholders, directors,
officers, employees, insurers, servants, agents, invitees or gusts, or the survivors of
any of them, resulting from or relating in any way to this Agreement for the
Performance of Services, or activities or omissions in connection herewith,
regardless of whether Company [Ensco], or others under contract to Company
[Ensco], may have been solely or concurrently negligent (passive or active), to any
degree, or otherwise at fault, and regardless of the unseaworthiness of any vessel,
any defect in premises, goods, equipment or materials, and irrespective of whether
the same pre‐existed this Agreement for the Performance of Services.
(Doc. 64‐2 at 2‐3.) The Bayou‐Ensco Agreement extends these indemnity provisions for Operators
‐13‐
of Ensco. Specifically:
it is recognized by Contractor [Bayou] that Company [Ensco], and its affiliated
companies, own and/or operate numerous land and offshore drilling rigs and
offshore supply vessels and that the goods/services to be furnished by Contractor
[Bayou] may not always be related to a specific location or facility and that
Contractor [Bayou] may be requested to furnish goods/services at any of said
locations or facilities. It is further recognized and acknowledged by Contractor
[Bayou] that Company [Ensco], as a drilling and marine vessel contractor, performs
its services under contract with various energy related companies, sometimes
referred to as "Operators." In the performance of its obligations under this
Agreement for the Performance of Services, Contractor [Bayou] is required, and by
its execution of this Agreement so covenants, to extend the benefit of his
indemnification and insurance, including additional insured status and waivers of
subrogation, to any Operator for whom Company [Ensco] may be performing
services under written Contract, for any period during which Contractor [Baloney]
furnishes goods/services pursuant to this Agreement for the Performance of
Services.
(Doc. 64‐2 at 5‐6.)
At the time of Baloney's alleged incident, an agreement titled "IADC Domestic Daywork
Drilling Contract ‐ Offshore" ("Ensco‐Stone Agreement") was in effect between Stone and Ensco.
(Doc. 64‐1.) The Ensco‐Stone Agreement details that
Operator [Stone] desires to have offshore wells drilled or worked over in the
Operating Area and to have work performed or carried out all auxiliary operations
and services as detailed in the Appendices . . . and Contractor [Ensco] is willing to
furnish the drilling vessel [ENSCO 99] designated in Appendix A together with
drilling and other equipment (hereinafter called the "Drilling Unit"), insurance and
personnel, all as detailed in the Appendices hereto, for the purpose of drilling said
wells and performing said auxiliary operations and services for Operator [Stone].
(Doc. 64‐1 at 3.)
‐14‐
“A maritime contract containing an indemnity agreement, whether governed by federal
maritime or Louisiana law, should be read as a whole and its words given their plain meaning
unless the provision is ambiguous.” Hardy v. Gulf Oil Corp., 949 F.2d 826, 834 (5th Cir. 1992). The
indemnity provisions “[s]hould not be read to impose liability for those losses or liabilities which
are neither expressly within its terms nor of such a character that it can be reasonably inferred that
the parties intended to include them within the indemnity coverage.” Corbitt v. Diamond M.
Drilling Co., 654 F.2d 329, 333 (5th Cir. 1981). Thus, an indemnity provision “will not afford
protection unless its terms are expressed unequivocally.” Hardy, 949 F.2d at 834.
The Court finds that the indemnity provisions found in the Bayou‐Ensco Agreement are
clear and unambiguous. It is clear that Bayou has agreed to be responsible for, protect, defend,
release, indemnify and hold Ensco harmless against any and all losses, costs, claims, causes of
action and liabilities (including, without limitation, the costs of suit and reasonable attorney's fees)
arising out of an injury to a Bayou employee. (Doc. 64‐2 at 2‐3.) Moreover, Stone is rightfully
considered an Operator under the clear terms of the Bayou‐Ensco Agreement. (Doc. 64‐2 at 5‐6;
see also Doc. 64‐1 at 3.) It is clear that Bayou agreed to extend the benefits of its indemnification
and insurance to any Operator, including Stone. (Doc. 64‐2 at 5‐6.)
The Court finds that the Bayou‐Ensco Agreement and the indemnity provisions are clear and
unequivocal. Accordingly, both Stone and Ensco are entitled to the enumerated indemnity
protections.
‐15‐
CONCLUSION
For the foregoing reasons, Bayou's Motion for Summary Judgment against Ensco is DENIED,
Ensco's Cross‐Motion for Summary Judgment against Bayou is GRANTED, Bayou's Motion for
Summary Judgment against Stone is DENIED, and Stone's Cross‐Motion for Summary Judgment is
GRANTED.
New Orleans, Louisiana on this 1st day of May, 2013.
_________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT COURT JUDGE
‐16‐
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?