Halliburton Company and Continental Casualty Company v. Norton Drilling Company and Liberty Mutual Insurance Company

302 F.2d 431, 1962 U.S. App. LEXIS 5297, 1963 A.M.C. 2169

• Court: Court of Appeals for the Fifth Circuit
• Decided: April 25, 1962
• Docket: 19043
• Status: Published

Opinions

TUTTLE, Chief Judge.

This is an appeal from the dismissal of the appellants’ third-party complaint wherein the appellants asserted a right to be indemnified by the appellee, the employer of the injured plaintiff, for any damages which might be recovered by by the plaintiff from the appellants. We affirm the judgment below.

In February, 1960, the appellee Norton, a drilling contractor, was engaged in drilling for oil in Lake Barre, in Terrebonne Parish, Louisiana. It was conducting the drilling operations from its submersible drilling barge. The plaintiff, Adam J. Sims, was employed by Norton as a member of the drilling crew of the barge.

On the morning of February 14, 1960, the appellant Halliburton, an oil well servicing concern, ran cemented casing into the well being drilled by Norton and furnished and installed what is referred to as a “cementing head” on top of the casing. This cementing head was a round, dome-shaped metallic object, weighing from 500 to 750 pounds. To facilitate the lifting of the cementing head off the casing when the casing was sufficiently hardened, there was attached to the top of the cementing head a metal, link-type chain.

On the afternoon of February 14,1960, Sims and others in Norton’s crew were directed to remove the cementing head from the casing. They apparently followed customary procedure by attaching a “catline” running from the barge’s hoisting device to the chain on the cementing head. As the hoist started to lift the cementing head off the casing, the metal chain on the cementing head parted, causing Sims to become entangled in the catline and to fall from the place where he had been working to the drilling floor deck of the barge some 35 feet below. As a result, Sims sustained severe injuries.

Sims brought suit for damages against Halliburton and its liability insurance carrier, the appellant Continental Casualty Company, alleging that his injuries were caused by:

“ * * * the negligence, carelessness and inattention of the defendant, Halliburton Co., its agents, servants and employees, and each of them, with respect to the manufacture, maintenance, upkeep and repair of the said cementing head and its appurtenances, particularly, but not exclusively the said handling chain of the said cementing head, as well as the negligent failure of the said defendant to furnish reasonably proper tools and appliances and to warn the plaintiff and others in his position of the dangers inherent therein.”

The action was brought under the general maritime law, Lake Barre being a navigable waterway of the United States, and under the Louisiana Direct Action Statute, LSA—R.S. 22:655. The appellee Liberty Mutual Insurance Company, Norton’s workmen’s compensation carrier, intervened on the ground that it was subrogated to the rights of Sims for payments made under the applicable workmen’s compensation statute.

Halliburton and Continental then filed a third party complaint against Norton. This complaint contained the following pertinent allegations:

“The cementing head, which had been screwed into the collar at the top of the casing, was equipped with a chain bridle, of adequate strength and in good condition, to facilitate lifting it off and lowering it to the drilling floor.

“If the chain bridle parted as alleged in plaintiff’s complaint, it was solely and proximately caused to do so by the negligence and improper handling of the cementing head by plaintiff and/or other employees of Norton Drilling Company and/or other persons for whose acts Norton Drilling Company is responsible and answerable.

“In the event that third-party complainants are held to have incurred any liability to plaintiff, Adam J. Sims, by reason of the facts and matters alleged in his complaint, which is expressly denied, third-party complainants are entitled to indemnity from Norton Drilling Company by virtue of its implied contractual warranty to remove the cementing head in a careful and workmanlike manner, and/or because Norton Drilling Company’s primary, active and moving negligence proximately caused plaintiff’s alleged injuries.”

Norton moved to dismiss or for summary judgment on the ground that the third-party complaint failed to state a claim upon which relief could be granted in that it was merely an attempt to enforce contribution between joint tortfeasors, and action not recognized under maritime law in personal injury cases. None of the parties having offered supporting affidavits, the motion to dismiss was granted on the pleadings alone.

The appellants pitch their case on two alternative theories. First, they claim that Norton is obliged to indemnify because Norton was “actively” or “primarily” negligent, whereas Halliburton was merely guilty of “passive” or “secondary” negligence. Second, they assert that the obligation to indemnify arose from Norton’s breach of a contractual warranty to perform its services in a careful and workmanlike manner.

Appellant’s claim based on the active-passive negligence dichotomy is clearly without merit. For one thing, the pleadings manifest no distinction in the kind or degree of negligence asserted against Halliburton and Norton. Sims, the plaintiff, seeks to hold Halliburton for furnishing defective equipment. Halliburton charges that Norton was negligent in handling this equipment. Both parties, therefore, are charged with active and affirmative negligence. See Peak Drilling Company v. Halliburton Oil Well Cementing Company, 10 Cir., 215 F.2d 368. Furthermore, even if we were to agree with Halliburton that its fault was only passive or secondary, there is a serious doubt that this alone would be a sufficient ground for imposing an obligation to indemnify upon Norton, in view of the fact that the applicable workmen’s compensation statutes have completely abolished an employer’s tort liability for injuries to his employees. See Brown v. American-Hawaiian S. S. Company, 3 Cir., 211 F.2d 16 (Longshoremans Act); Mickle v. The Henriette Wilhelmine Schulte, N.D.Cal., 188 F.Supp. 77 (Longshoremans Act); McClintic-Marshall Co. v. O’Leary, 147 La. 85, 84 So. 503 (Louisiana Workmen’s Compensation Law, LSA-R.S. 23:1021 et seq.).

The implied warranty claim is equally unavailing. In this regard, the appellants rest their hopes on Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133, and the cases following in its wake. Ryan involved a claim for indemnity by a shipowner against a stevedoring company. An employee of the stevedoring company had been injured due to the improper stowage of cargo by the company. The employee brought suit against the shipowner based on the latter’s absolute liability for injuries caused by the vessel’s unseaworthy condition. The shipowner thereupon sought to hold the stevedoring company for any damages which the plaintiff-employee might recover. The Supreme Court allowed the claim for indemnity on the theory that the stevedoring company had contracted with the shipowner to perform its services in a careful and workmanlike manner, and that this constituted an agreement to indemnify the shipowner for any losses attributable to the company’s failure to so perform. In a later case, Crumady v. The Joachim Hendrik Fisser, 358 U.S. 423, 79 S.Ct. 445, 3 L.Ed.2d 413, the Supreme Court extended the holding of Ryan to a situation where the unseaworthy condition had been created by the shipowner rather than the stevedoring company, but where the latter’s negligence “brought the unseaworthiness of the vessel into play,” thereby causing injury to the plaintiff-employee and exposing the shipowner to liability.

The initial defect in the appellants’ claim based on the theory of implied warranty is that the pleadings are completely devoid of any indication that Norton promised Halliburton that it would remove the cementing head in a careful and workmanlike manner. In other words, the pleadings do not show that there was a contract between Norton and Halliburton, and, in the absence of a contractual relationship, there is no basis for a claim of contract indemnity. The third-party complaint states simply that Norton breached an implied contractual warranty to remove the cementing head in a careful and workmanlike manner. This is a naked conclusion of law, unsupported by the factual allegations of the complaint, and which need be given no weight in determining the sufficiency of the complaint. Mickle v. The Henriette Wilhelmine Schulte, supra, 188 F.Supp. at page 80.

Indeed, that there was no contract between Norton and Halliburton is demonstrated by the assertion in Halliburton’s own brief that Norton’s obligation to indemnify arose under “its [i. e. Norton’s] drilling contract” with the owner of the well. It seems clear, therefore, that Halliburton and Norton were both merely independent contractors of the owner of the well and that there was no contract between them which would obligate Norton to make indemnity in the instant case. See Peak Drilling Company v. Halliburton Oil Well Cementing Company, supra.

But Halliburton then says that it is entitled to indemnity as a third party beneficiary of Norton’s promise to the owner of the well that it would perform its drilling services in a careful and workmanlike manner. In support of this proposition, Halliburton points to Crumady v. The Joachim Hendrik Fisser, supra, where the shipowner was allowed to recover from the stevedoring company even though the company had contracted with a charterer of the vessel rather than with the shipowner itself. That decision was based on the theory that:

“The warranty [of workmanlike service] which a stevedore owes when he goes aboard a vessel to perform services is plainly for the benefit of the vessel whether the vessel’s owners are parties to the contract or not. That is enough to bring the vessel into the zone of modern law that recognizes the rights in third-party beneficiaries.” Crumady v. The Joachim Hendrik Fisser Co., supra, 358 U.S. at 428, 79 S.Ct. at 448.

Unless we are to say that a drilling contractor’s promise to perform in a careful and workmanlike manner inures to the benefit of the “well” itself and thence to all suppliers of equipment to the well, it is apparent that appellants’ third-party beneficiary claim must fail. We are not inclined to expand the third-party beneficiary concept to the limits suggested by the appellants. It stretches credulity to imagine that Norton’s promise to the owner of the well was intended to benefit each and every supplier of equipment to the well. While there is some logic in holding that a stevedore’s warranty is meant to benefit the owner of the vessel, it would take the most artificial and tortuous reasoning to permit application of the third-party beneficiary theory to the fácts of the instant case. We, therefore, reject the appellants’ contention on this point.

Although we need not go so far in affirming the judgment below, it would not be inappropriate to discuss briefly a perhaps more fundamental reason supporting dismissal of the third-party complaint. We have assumed up to here that the third-party complaint could have withstood an attack on its sufficiency if the pleadings had manifested the existence of a warranty of workmanlike service running from Norton to Halliburton. We might note at this point, however, that the validity of this proposition is open to serious question. As indicated previously, the appellants’ claim in this regard is bottomed on the stevedore-shipowner cases wherein it has been held that a shipowner is entitled to indemnity from a stevedoring company if the negligence of the stevedoring company “brings into play” an unseaworthy condition which has its origin in some act or omission on the part of the shipowner. These decisions represent somewhat of a departure from the general rule that a contract will not be construed to provide for indemnification of the indemnitee for losses due to his own neglect, unless the intention to do so is expressed in unequivocal terms. 27 Am.Jur. Indemnity, Section 15. Cf. Jacksonville Terminal Co. v. Railway Express Agency, 5 Cir., 296 F.2d 256. The reason for this exception to the general rule is explained in a recent opinion by Judge Mathes in Hugev v. Dampskisaktieselskabet International, S.D.Cal., 170 F.Supp. 601 at 609-610:

“The stevedoring agreement is a maritime contract * * *, so any obligations to be implied as in fact arising from the contract should take cognizance of the maritime considerations involved. Ships, as well as seamen and longshoremen, are subject to the ‘hazards of maritime service.’ Ships still break up at sea. Even though the ships of today may not be as vulnerable, the typhoons of our day are as ‘formidable and swift’ as when Conrad wrote. The Pacific Coast is as treacherous now as it was some two generations ago when the Nottingham was battered into a hulk off the Oregon coast. The Nottingham, 9 Cir., 1916, 236 F. 618.

“In almost every instance, when a stevedoring contractor commences the work of loading or unloading a seagoing vessel, the ship has arrived in port only a few hours before. She may have been at sea for weeks or months. Almost always, she has ridden some heavy seas. Often she may have rolled and pitched through mountainous seas for days, taking thousands of tons of water over her decks, sailed through freezing and tropical weather, and been beaten by 100 mile an hour gales. Almost surely she will have been serviced by stevedores of varying degrees of competency in other parts throughout the world.

“Being a mass of plates, pipes, wires, beams and various mechanisms, each to some degree vulnerable to the elements, it would be too much to expect a cargo vessel to arrive in port with all equipment, appliances and facilities in a fully seaworthy condition. Especially is this true with respect to the hatches, booms and winches, which are relatively more likely to be in disorder because of the elements, and the abuse and misuse of men as well. It is reasonable to expect, then, that many things may be wrong with a freighter and her equipment and appliances when she arrives in port; that she may well be a place of danger even as she docks. And all of these lurking dangers may be due entirely to the hazards of the ship’s service.

“The stevedoring contractor knows that the ship has been at sea; that she may be in many respects dangerous to the life and limb of an unskilled person; that if a condition is found which is unsafe for the professional longshoreman, as a rule the contractor can remedy it at the expense of the shipowner; that if the stevedoring operations are thereby delayed, the shipowner normally must pay for standby time.

“Stevedoring contractors hold themselves out as being trained and equipped to cope with these conditions and these dangers. To this end, the stevedoring contractor is usually given full use and charge of the ship’s loading and unloading equipment and appliances and the cargo hatches and holds. So it is “that the stevedoring contractor cannot reasonably expect, and does not ■expect, to board a vessel which in all respects, as to equipment and appliances as well as hull, is in a seaworthy condition, or even in a reasonably safe condition. Hence it is not reasonable to infer that the ship■owner, in executing the stevedoring contract, impliedly covenants that the condition of the ship or of her ■equipment or appliances will exceed the stevedoring contractor’s reasonable expectations.”

It is apparent that none of the ■considerations discussed by Judge Mathis are present in the instant case. Certainly, a drilling contractor has no reason to expect that equipment furnished by a supplier to the well may be so defective as to be dangerous to life and limb. Consequently, it is highly unreasonable to assume that a drilling contractor, merely by agreeing to perform its services in a careful and workmanlike manner, intends to immunize the supplier of defective equipment from liability for any losses attributable in whole or in part to such defect. Thus, even if Norton did promise Halliburton, either directly or indirectly, that it would remove the cementing head with reasonable care, we would have difficulty construing this as a promise to indemnify Halliburton for losses traceable directly to a defect in the cementing head, for which defect Halliburton alone would be responsible.

One final point. Halliburton also contends that it is entitled to indemnity under the law of Louisiana. Apart from the fact that federal maritime law is controlling here, see Koninklyke Nederlandsche Stoomboot Maalschappy, N. V., Royal Netherlands Steamship Company v. Strachan Shipping Co., 5 Cir., March 30, 1962, 301 F.2d 741, and Offshore Co. v. Robison, 5 Cir., 1959, 266 F.2d 769, 75 A.L.R.2d 1296, we might also state that the same result we have reached would follow if the law of Louisiana were applied. See United Gas Corporation v. Guillory, 5 Cir., 1953, 206 F.2d 49.

Of course, we recognize that a complaint cannot ordinarily be dismissed for failure to state a claim “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80. We think this rule was satisfied in the instant case, and that the District Court was, therefore, correct in dismissing the third-party complaint.

The judgment is

Affirmed.