Continental Casualty Co. v. Associated Pipe & Supply Co.

447 F.2d 1041
CourtCourt of Appeals for the Fifth Circuit
DecidedJuly 29, 1971
DocketNo. 29157
StatusPublished
Cited by17 cases

This text of 447 F.2d 1041 (Continental Casualty Co. v. Associated Pipe & Supply Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Continental Casualty Co. v. Associated Pipe & Supply Co., 447 F.2d 1041 (5th Cir. 1971).

Opinion

RIVES, Circuit Judge:

This case comes to the federal courts by virtue of the federal jurisdiction over the outer continental shelf. Just under a decade ago, Texaco, Inc. (Texaco) entered into a contract with Offshore Gathering Corporation (Offshore) calling for Offshore to construct a pipeline to a Texaco oil and gas field off the coast of Louisiana. Offshore completed the construction and it was accepted by Texaco May 28, 1962.

Unfortunately, Offshore left unpaid numerous parties who had provided labor, material, equipment and services. Legal actions were soon initiated, an in-terpleader filed by Texaco, an inter-pleader filed by Offshore’s surety, Continental Casualty Company (Continental), and several personal actions were consolidated in the district court for trial. Nearly seventy claimants were involved.

A bifurcated trial was held, dividing the issues, generally, into questions of law and factual issues on the merits of each claim. District Judge Fred T. Cassibry wrote two opinions, 279 F.Supp. 490; 310 F.Supp. 1207, which discuss the legal issues at length.

Because the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq., makes the state law of Louisiana applicable in this case, the federal courts are presented with the task of resolving a great many issues of state law. We are in accord with Judge Cassibry’s sentiments stated in a footnote in his second opinion:

“This case is replete with complex state law problems, concerning which Louisiana Courts have had little op[1045]*1045portunity to address themselves, this suit finds its way to the Court of Appeals, I am sure they will become keenly aware of the need for a certification procedure by which the Louisiana Supreme Court could determine these knotty legal issues.” If

310 F.Supp. 1216, 1217.

We will discuss the issues presented in the following order:

I. Whether the pipeline is a type of structure contemplated by and within the scope of the Louisiana Private Works Statute, L.S.A.-R.S. 9:4801, et seq.

II. Whether the bond given by Continental is a statutory one as contemplated by the Private Works Statute, L.S.A.-R.S. 9:4801, et seq. (particularly § 9:4802).

III. Whether the pipeline is a type of construction contemplated by and within the scope of the Louisiana Oil Well Lien Statute, L.S.A.-R.S. 9:4861 et seq.

IV. Whether recordation is essential to the enforceability of the lien created by the Oil Well Statute, L.S.A.R.S. 9:4861, et seq.

V. Whether erewboat services create liens under the Oil Well Statute, L.S.A.-R.S. 9:4861, et seq.

VI. Whether catering and housekeeping services create liens under the Oil Well Statute, L.S.A.-R.S. 9:4861, et seq.

VII. Whether manned equipment rentals are covered by a bond under Private Works Act, L.S.A.-R.S. 9:-4801, et seq.

VIII. Whether claimant United Tugs, Inc., is a subcontractor or mere renter of equipment.

IX. Whether Texaco is liable for claims of United Tugs, Inc., and Thomas Jordan, Inc., by virtue of representations made to them or by assignments of the contract funds executed by Offshore.

X. Whether the judgment awarding Ellzey Marine Supplies 25 per cent of its claim was correct.

XI. Whether the judgment holding that Golden Meadow Oil Company, Inc., had failed to prove its claim was correct.

XII. Whether Texaco was correct in deducting amounts owed it by Offshore from the contract funds it retained and deposited in the registry of the court pursuant to its interpleader.

XIII. Whether the 10 per cent attorney’s fees provided for by the Oil Well Statute, L.S.A.-R.S. 9:4861, should be calculated on the original debt or the original debt plus interest.

XIV. Whether successful claimants are entitled to have their judgments increased by virtue of Act No. 315 of 1970, Louisiana session laws, which increased the rate of legal interest.

A brief physical description of the pipeline is required here.1 Four offshore well sites are involved. Pipelines were constructed leading directly from each of three sites to the fourth site, and from this site leading inland to a plant called the Garden Island Bay facility. Thus the fluid product of the wells, a combination of oil, gas and water, was transported inland through this system. As aptly described by one of the parties, it resembled roughly “a long leg with a three-toed foot at its end.”

The system, some ten miles in length, was embedded in the Gulf bottom, emerging up into and above the water only where it connected to the well sites and inland facility. The fluids move from the bottom of the wells to the inland facility by the original pressure from the wells. Some metering is done at the central well site, but no separating or any[1046]*1046thing which could be termed “processing” is done until the fluids reach the inland facility.

At the inland facility, the first permanent separation of oil, gas and water occurs, and oil is moved on in the system through a common carrier pipeline by pressure injected by devices located there.

1. Applicability of Louisiana Private Works Statute.

The Private Works Act, La.Rev.Stats. 9:48018 establishes a lien for those who provide labor, materials, machinery, or fixtures, exclusive of those who rent or lease out movable property, “for the erection, construction, repair or improvement of immovable property,” as well as for those who provide materials or supplies “for use in machines used in or in connection with the erection, construction, repair or improvement of any building, structure or other immovable property.” On its face, the statute would seem to cover the pipeline here, whether it is considered a “structure” or an “improvement.” A question of the statute’s applicability is presented, however, by language used in two Louisiana cases, Cala-tex Oil & Gas Co. v. Smith, 1932, 175 La. 678, 144 So. 243, and Hayes Lumber Co. v. H. M. Jones Drilling Co., 1933, 177 La. 626, 148 So. 899, which at least provide a basis for the argument that the Private Works Act applies only to structures located above ground.

These cases were studied in depth by the district court, and little can be added to the well-reasoned treatment of them below. However, since their interpretation is critical to this issue of this litigation, and since the appellees feel that the district court overstepped its bounds in construing state law, further discussion is required.

In Calatex a contractor who drilled an oil or gas well failed to pay claims for labor and materials. The claimants asserted liens under a 1926 Public Works Act which did not require filing of liens. The surety of the contractor asserted that the only applicable statute was the 1916 Oil Well Lien Statute,2 3 which did require filing and notice to the owner. The state court held that it made no difference which statute applied, since language in both statutes placed the surety in the shoes of the contractor, and neither statute required notice or filing to secure claims against the contractor (as opposed to the owner).

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Bluebook (online)
447 F.2d 1041, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-casualty-co-v-associated-pipe-supply-co-ca5-1971.