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  • Joseph Robert Stoot v. Fluor Drilling Services, Inc. v. D & D Catering Service, Inc., Third Party, 851 F.2d 1514, 3rd Cir. (1988)

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    This document summarizes a court case regarding whether Louisiana's Oilfield Anti-Indemnity Statute applies to invalidate an indemnification provision in a catering services contract for a drilling rig. The district court held that maritime law, not Louisiana law, governed the contract. However, the appellate court determined that the contract contained a choice of law provision stating that Louisiana law applied. Louisiana has a substantial relationship to the parties and a strong interest in protecting contractors from indemnification requirements. Therefore, the appellate court held that the Louisiana Anti-Indemnity Statute invalidated the indemnification provision.

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    Filed: 1988-08-15 Precedential Status: Precedential Citations: 851 F.2d 1514 Docket: 87-4462

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    This document summarizes a court case regarding whether Louisiana's Oilfield Anti-Indemnity Statute applies to invalidate an indemnification provision in a catering services contract for a drilling rig. The district court held that maritime law, not Louisiana law, governed the contract. However, the appellate court determined that the contract contained a choice of law provision stating that Louisiana law applied. Louisiana has a substantial relationship to the parties and a strong interest in protecting contractors from indemnification requirements. Therefore, the appellate court held that the Louisiana Anti-Indemnity Statute invalidated the indemnification provision.

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    Joseph Robert Stoot v. Fluor Drilling Services, Inc. v. D & D Catering Service, Inc., Third Party, 851 F.2d 1514, 3rd Cir. (1988)

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    This document summarizes a court case regarding whether Louisiana's Oilfield Anti-Indemnity Statute applies to invalidate an indemnification provision in a catering services contract for a drilling rig. The district court held that maritime law, not Louisiana law, governed the contract. However, the appellate court determined that the contract contained a choice of law provision stating that Louisiana law applied. Louisiana has a substantial relationship to the parties and a strong interest in protecting contractors from indemnification requirements. Therefore, the appellate court held that the Louisiana Anti-Indemnity Statute invalidated the indemnification provision.

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    of 9

    851 F.

    2d 1514
    1989 A.M.C. 20, 12 Fed.R.Serv.3d 246

    Joseph Robert STOOT, Plaintiff,


    v.
    FLUOR DRILLING SERVICES, INC., Defendant-Appellee,
    v.
    D & D CATERING SERVICE, INC., Third Party DefendantAppellant.
    No. 87-4462.

    United States Court of Appeals,


    Fifth Circuit.
    Aug. 15, 1988.

    Norman P. Foret, Lafayette, La., for Stoot.


    Daniel A. Webb, Collins C. Rossi, Richard A. Fraser, III, New Orleans,
    La., Anthony D. Moroux, Lafayette, La., for Fluor Drilling.
    Appeal from the United States District Court for the Western District of
    Louisiana.
    Before CLARK, Chief Judge, RUBIN and JONES, Circuit Judges.
    CLARK, Chief Judge:

    D & D Catering Service, Inc. appeals the district court's order enforcing a
    contractual provision requiring D & D to defend and indemnify Fluor Drilling
    Services, Inc. Holding that the provision is void under Louisiana's Oilfield
    Anti-Indemnity Statute, we reverse.

    I.
    2

    This case arose when Eloise Porter, an employee of D & D Catering Service,
    Inc. (D & D), attacked Joseph Stoot, an employee of Fluor Drilling Services,
    Inc. (Fluor), aboard the drilling rig, MR. DAVE. Stoot's hand was severely

    lacerated in the attack.


    3

    Stoot sued D & D in the Western District of Louisiana. The suit ended in a
    verdict for D & D which we affirmed. Stoot v. D & D Catering Service, Inc.,
    807 F.2d 1197 (5th Cir.1987), cert. denied, --- U.S. ----, 108 S.Ct. 82, 98
    L.Ed.2d 44 (1987). Stoot then sued Fluor in the Western District of Louisiana.
    Fluor filed a third party complaint against D & D claiming that D & D was
    obligated to defend and indemnify it under Article 10 of their catering contract.
    D & D refused to defend and indemnify. Fluor filed a motion for summary
    judgment seeking a ruling that D & D was obligated to defend and indemnify.
    The main issue in the motion was whether Louisiana's Oilfield Anti-Indemnity
    Statute, La.Rev.Stat.Ann. Sec. 9:2780 (West Supp.1987) (Anti-Indemnity
    Statute), which declares void some indemnification agreements made by
    independent contractors, was applicable. The district court held that the Statute
    was not applicable because this was a maritime contract governed by federal
    law, and granted Fluor's motion. The case proceeded to trial with Fluor
    assuming its own defense. On the first day of trial, Stoot and Fluor settled. The
    district court entered a consent judgment against Fluor awarding Stoot
    $150,000.00. D & D then appealed the summary judgment order. Because the
    district court has not yet ruled on the reasonableness of the settlement, the
    summary judgment is not a final order under 28 U.S.C. Sec. 1291 (1966).

    However, we have jurisdiction under 28 U.S.C. Sec. 1292(a)(3) (1966). We


    reverse.

    A. Jurisdiction:
    5

    28 U.S.C. Sec. 1292(a)(3) permits immediate appeals from interlocutory


    decrees determining the rights and liabilities of parties to admiralty cases. The
    statute covers both admiralty and maritime cases. Fed.R.Civ.P. 9(h). An
    interlocutory decree which finally determines the liability of at least one party
    to a maritime suit is appealable under Sec. 1292(a)(3) even if damages haven't
    been finally computed. See, e.g., Martha's Vineyard Scuba Headquarters, Inc. v.
    Unidentified, Wrecked and Abandoned Steam Vessel, 833 F.2d 1059, 1063-64
    (1st Cir.1987); Todd Shipyards Corp. v. Auto Transport, S.A., 763 F.2d 745,
    751 (5th Cir.1985); O'Donnell v. Latham, 525 F.2d 650, 652 (5th Cir.1976).
    The intent of Sec. 1292(a)(3) is:

    "to permit a party found liable to take an immediate appeal from that finding
    and thereby possibly avoid an oftentimes costly and protracted trial of the
    damages issue."

    Seattle-First National Bank v. Bluewater Partnership, 772 F.2d 565, 568 (9th
    Cir.1985) (quoting 9 Moore's Federal Practice Sec. 110.19 at 209-10 (1985)).
    Because the district court's order finally determines D & D's rights and
    obligations vis-a-vis Fluor, it is immediately appealable despite the fact that the
    reasonableness of Fluor's settlement with Stoot has not been determined.

    Fluor questions the timeliness of D & D's appeal. Under 28 U.S.C. Sec. 2107
    (1982), the notice of appeal from an interlocutory decree in admiralty must be
    filed within 15 days after entry of the decree. See Hunter v. Department of the
    Air Force Agency, 846 F.2d 1314, 1316 n. 4 (11th Cir.1988). D & D's notice of
    appeal was filed 23 days after entry of the district court's order. Therefore, it
    would be untimely if Sec. 2107 were still in effect.

    However, for the reasons set forth in Curacao Drydock Co. v. M/V AKRITAS,
    710 F.2d 204, 205-06 (5th Cir.1983), the time limits set by Fed.R.App.Pro. 4(a)
    (1) have superceded the periods fixed by Sec. 2107. In Curacao, we held that
    because Rule 4(a)(1) has superceded Sec. 2107, a party appealing a final
    judgment in an admiralty case must file his notice of appeal within 30 days as
    required by Rule 4(a)(1), not within 90 days as prescribed by Sec. 2107. Rule
    4(a)(1) makes no distinction between appeals from final orders and appeals as
    of right from interlocutory orders. Hence, Rule 4(a)(1) also supercedes Sec.
    2107's conflicting provision giving parties only 15 days to file notices of appeal
    from interlocutory maritime decrees. In re White Cloud Charter Boat Co., Inc.,
    813 F.2d 1513, 1515-16 (9th Cir.1987). Under Rule 4(a)(1), parties appealing
    interlocutory maritime decrees have 30 days to file their notices of appeal. D &
    D's notice of appeal, filed 23 days after the district court's order, was timely.

    B. Choice of Law:
    10

    The district court held that maritime law, not Louisiana law, governed D & D
    and Fluor's contract. The court relied on Theriot v. Bay Drilling Corp., 783
    F.2d 527, 538-39 (5th Cir.1986) in which we held that the construction of
    indemnity provisions in maritime contracts is governed by maritime law.
    Theriot went on to say that whether a contract is maritime must be determined
    by the nature and character of the contract. Theriot, 783 F.2d at 538.

    11

    To determine the maritime nature of D & D's contract, the district court relied
    on Lefler v. Atlantic Richfield Co., Inc., 785 F.2d 1341 (5th Cir.1986) in which
    we held that a catering services contract in which the contractor agreed to
    provide household services to barges or other movable seagoing vessels
    included maritime obligations. Lefler, 785 F.2d at 1343. The court concluded

    that under a straightforward application of Theriot and Lefler, D & D's contract
    to provide catering services to the drilling rig, MR. DAVE, included maritime
    obligations and was governed by maritime law.
    12

    The district court's analysis of the maritime nature of D & D's contract was
    correct. A caterer's employee working as a galley hand on a drilling rig is a
    seaman. O'Dell v. North River Insurance Co., 614 F.Supp. 1556, 1560
    (W.D.La.1985); Bolfa v. Pool Offshore Co., 623 F.Supp. 1177, 1179
    (W.D.La.1985). Porter was engaged in providing galley services aboard a
    drilling rig when she stabbed Stoot. Hence, the contract was correctly construed
    as one involving maritime obligations. However, it does not automatically
    follow that maritime law applies. The district court failed to consider the
    parties' choice of law clause in Article 12 of the contract which stated that
    Louisiana law governed.

    13

    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. Thurmond v. Delta Well Surveyors, 836 F.2d 952, 952 (5th Cir.1988);
    Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1214 (5th Cir.1986); Corbitt
    v. Diamond M. Drilling Co., 654 F.2d 329, 332 (5th Cir.1981); O'Dell v. North
    River Ins. Co., 614 F.Supp. 1556, 1558 (W.D.La.1985). 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. Hale v. Co-Mar Offshore Corp., 588 F.Supp. 1212,
    1215 (W.D.La.1984).

    14

    Louisiana has a substantial relationship to the parties in this case. Fluor, a


    California corporation, was qualified to do business in Louisiana. More
    importantly, D & D, the party seeking the protection of Louisiana law, was a
    Louisiana corporation. Louisiana has declared a strong interest in protecting
    resident independent contractors from the inequities of indemnity clauses that
    require the contractor to indemnify the vessel owner against his own
    negligence. The Anti-Indemnity Statute expressly states:"The legislature finds
    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 which occur in
    a solid, liquid, gaseous, or other state, to the extent those provisions apply to
    death or bodily injury to persons. It is the intent of the legislature by this
    Section to declare null and void and against public policy of the state of
    Louisiana any provision in any agreement which requires defense and/or
    indemnification, for death or bodily injury to persons, where there is negligence

    or fault (strict liability) on the part of the indemnitee, or an agent or employee


    of the indemnitee, or an independent contractor who is directly responsible to
    the indemnitee."
    15

    La.Rev.Stat.Ann. Sec. 9:2780, subd. A (West Supp.1987).

    16

    Several cases have recognized the strength of Louisiana's interest in applying


    the Anti-Indemnity Statute. In Matte v. Zapata Offshore Co., 784 F.2d 628 (5th
    Cir.1986), cert. denied sub nom. Zapata Offshore Co. v. Timco, Inc., 479 U.S.
    872, 107 S.Ct. 247, 93 L.Ed.2d 171 (1986), the court refused to enforce a
    choice of law clause in a master service agreement which specified federal
    maritime law. The court stated that it would not participate in such an obvious
    end-run around the Anti-Indemnity Statute. Matte, 784 F.2d at 631. In Lirette v.
    Union Texas Petroleum Corp., 467 So.2d 29, 32 (La.App. 1 Cir.1985), the
    Louisiana Court of Appeals declared void a Texas choice of law clause in a
    master service agreement because it precluded application of the AntiIndemnity Statute and hence violated Louisiana public policy.

    17

    By contrast, application of the Anti-Indemnity Statute does not conflict with


    any fundamental purpose of maritime law. The Statute neither conflicts with
    nor is it preempted by federal maritime law. Matte, supra, 784 F.2d at 630,
    Doucet v. Gulf Oil Corp., 783 F.2d 518, 525 (5th Cir.1986), cert. denied sub
    nom. Gulf Oil Corp. v. Danes & Curole Marine Contractors, Inc., --- U.S. ----,
    107 S.Ct. 272, 93 L.Ed.2d 249 (1986). Indemnity clauses in maritime contracts
    are typically construed under maritime law because of the federal interest in
    maintaining a uniform body of maritime law and because states "do not have an
    extensive regulatory interest in contracts of indemnity." O'Dell, supra, 614
    F.Supp. at 1559. However, where a choice of law clause mandates the
    application of a state's law and that state has a strong public policy favoring the
    application of its law and a substantial relationship to either the parties or the
    transaction, then that state's law will govern absent a countervailing federal
    interest. Because Louisiana's Anti-Indemnity Statute does not conflict with any
    fundamental purpose of maritime law, Louisiana law controls the rights of the
    parties here as they agreed it should.

    C. Anti-Indemnity Statute:
    18

    Having concluded that Louisiana law governs, we must determine whether the
    Anti-Indemnity Statute voids the indemnity clause in D & D's contract. The
    Anti-Indemnity Statute provides that:

    19

    "Any provision contained in, collateral to, or affecting an agreement pertaining

    19

    "Any provision contained in, collateral to, or affecting an agreement pertaining


    to a well for oil, gas, or water, or drilling for minerals which occur in a solid,
    liquid, gaseous, or other state, 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."

    20

    La.Rev.Stat.Ann. Sec. 9:2780, subd. B (West Supp.1987).

    21

    Article 10 of the catering contract between Fluor and D & D provides that:

    22

    "D and D shall hold [Fluor] free and harmless from any and all liability, costs
    and charges arising out of injuries or damage to any and all persons, employees
    and/or property in any way arising out of or incident to the work to be
    performed under this Contract whether caused in whole or part by negligence of
    [Fluor]. D and D further agrees to investigate, handle, respond to, provide
    defense for and defend any such claims, demand or suit as its sole expense and
    agrees to bear all other costs and expenses related thereto, even if it is
    groundless, false or fraudulent."

    23

    Because the indemnity clause requires D & D to defend and indemnify Fluor
    against Fluor's own negligence, the clause is void under the Anti-Indemnity
    Statute if the Statute applies.

    24

    By its terms, the Statute does not apply retroactively to contracts entered into
    before its effective date, September 11, 1981. La.Rev.Stat.Ann. Sec. 9:2780,
    subd. I (West Supp.1987); Lirette v. Union Texas Petroleum Corp., 467 So.2d
    29, 32-33 (La.App. 1 Cir.1985). D & D contracted to provide catering services
    to Fluor for a period of one year commencing on July 1, 1977. The contract
    also provided that it would "continue in force and effect thereafter" unless
    either party gave the other 30 days written notice of termination. Under this
    automatic continuation clause, the annual period which immediately preceded
    Stoot's injury on April 18, 1982 occurred on July 1, 1981. Hence, whether we
    consider July 1, 1977 or July 1, 1981 (as Fluor suggests) to be the contract's
    date, the contract was entered into before the Statute's effective date. Hence,
    the Statute may not retroactively apply unless an exception listed in subdivision
    I of the Statute comes into play. It is not necessary for this court to decide the
    precise meaning of the "continue in effect" language under Louisiana contract
    law.

    25

    Subdivision I states that the Anti-Indemnity Statute applies retroactively to:

    26

    "certain provisions contained in, collateral to or affecting agreements in


    connection with the activities listed in Subsection C which are designed to
    provide indemnity to the indemnitee for all work performed between the
    indemnitor and the indemnitee in the future. This specifically includes what
    [are] commonly referred to in the oil industry as master or general service
    agreements or blanket contracts in whatever form and by whatever name. The
    provisions of this Act shall not apply to a contract providing indemnity to the
    indemnitee when such contract was executed before the effective date of this
    Act and which contract governs a specific terminable performance of a specific
    job or activity listed in Subsection C."1

    27

    La.Rev.Stat.Ann. Sec. 9:2780, subd. I (West Supp.1987).

    28

    If the Fluor/D & D contract was a master service agreement, then it will be
    covered by the Statute. If it was a contract for specific terminable performance,
    the Statute is not to be applied retroactively.

    29

    A master service agreement is a blanket contract (whether or not so labeled)


    which covers any kind of work the independent contractor might be requested
    to perform for the principal and which renews automatically or continues in
    effect until either party gives notice of termination. Doucet, supra, 783 F.2d at
    526. A master service agreement usually refers to the type of work
    contemplated but does not identify a determinate time or place of performance.
    Page v. Gulf Oil Corp., 775 F.2d 1311, 1315 (5th Cir.1985). Blanket contracts
    set forth the terms of performance and payment for any and all work and pay
    the parties might exchange in the future. Burnham v. Sun Oil Co., 618 F.Supp.
    782, 785 (W.D.La.1985).

    30

    By contrast, a contract for specific terminable performance is directed at a


    specific job or activity and terminates on its own terms at the completion of the
    job or upon the impossibility of further performance. Burnham, supra, 618
    F.Supp. at 785.

    31

    D & D's contract contains elements of both a master service agreement and a
    contract for specific terminable performance. Like a contract for specific
    terminable performance, it states that D & D shall provide to certain of Fluor's
    named drilling rigs a specific service, catering, on a continuous basis with
    performance commencing on July 1, 1977. Like a master service agreement, D
    & D's obligations do not terminate automatically upon the completion of any

    specific drilling job, but renew automatically from year to year as the rigs move
    from job to job until either party gives notice of termination. The features that
    identify this as a master service agreement clearly predominate.
    32

    The Louisiana legislature explicitly stated that a master service agreement


    entered into before the effective date of the Statute is covered by the Statute.
    La.Rev.Stat.Ann. Sec. 9:2780, subd. I (West Supp.1987). The legislature
    undoubtedly made this explicit reference to master service agreements because
    the agreements automatically renew and often did not require performance until
    several years after they were executed. If the legislature had not expressly
    included master service agreements entered into before the Statute's effective
    date, then contractors bound by these agreements would be subject indefinitely
    to defend-and-indemnify clauses despite the Statute's passage. This could have
    largely defeated the intent of the legislature. Because D & D's contract with
    Fluor is automatically renewing, D & D is within the class of contractors the
    legislature intended to protect when it drafted the exception in subdivision I.

    33

    Further, the Statute specifies that it does not apply retroactively to contracts
    which call for specific and terminable performance. La.Rev.Stat.Ann. 9:2780,
    subd. I (West Supp.1987). D & D's contract called for specific performance--rig
    catering at set prices; however, that performance was not terminable. Burnham,
    supra, 618 F.Supp. at 785. Hence, D & D's contract is not exempted as a
    contract for specific terminable performance entered into before the Statute's
    effective date. The Anti-Indemnity Statute voids D & D's obligation to defend
    and indemnify Fluor against Stoot's claims. D & D is not obligated to defend
    Fluor or to indemnify it for the consent judgment the district court entered in
    Stoot's favor.

    D. Prescription:
    34

    D & D argues that Stoot's claim against Fluor was prescribed but that Fluor
    waived the affirmative defense of prescription by failing to plead it in district
    court. D & D argues that Fluor's waiver was not binding on D & D and that D
    & D should be allowed to assert prescription on its own behalf. Because D & D
    had no obligation to defend or indemnify Fluor, we need not address this
    argument here.

    II.
    The order of the trial court is
    35

    REVERSED.

    Subdivision C provides:
    "The term 'agreement,' as it pertains to a well for oil, gas, or water, or drilling
    for minerals which occur in a solid, liquid, gaseous, or other state, as used in
    this Section, means any agreement or understanding, written or oral, concerning
    any operations related to the exploration, development, production, or
    transportation of oil, gas, or water, or drilling for minerals which occur in a
    solid, liquid, gaseous, or other state, including but not limited to drilling,
    deepening, reworking, repairing, improving, testing, treating, perforating,
    acidizing, logging, conditioning, altering, plugging, or otherwise rendering
    services in or in connection with any well drilled for the purpose of producing
    or excavating, constructing, improving, or otherwise rendering services in
    connection with any mine shaft, drift, or other structure intended for use in the
    exploration for or production of any mineral, or an agreement to perform any
    portion of any such work or services or any act collateral thereto, including the
    furnishing or rental of equipment, incidental transportation, and other goods
    and services furnished in connection with any such service or operation."

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