John E. Graham & Sons v. Brewer

210 F.3d 333
CourtCourt of Appeals for the Fifth Circuit
DecidedApril 25, 2000
Docket99-30301
StatusPublished
Cited by5 cases

This text of 210 F.3d 333 (John E. Graham & Sons v. Brewer) 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
John E. Graham & Sons v. Brewer, 210 F.3d 333 (5th Cir. 2000).

Opinion

T. JOHN WARD, District Judge:

An offshore contractor appeals a decision casting it in judgment to an owner on an indemnity claim. Although it is a close question, we believe that the Texas Oilfield Anti-Indemnity Act bars enforcement of the indemnity agreement. Accordingly, we REVERSE.

I.

BACKGROUND AND PROCEDURAL POSTURE

In 1994, Enron Oil & Gas Company (“Enron”) owned several offshore plat *336 forms in the Matagorda Island Area off the coast of the State of Texas. A bridge connected two of the platforms, and together they formed Enron’s A-B complex. The A platform supported eight gas wells, and the B platform held the production facilities. The production side of the complex included gas separators, testing equipment, meters, quarters, and other devices used in the production of natural gas. 1 In general terms, the gas flowed from the wellheads located on the A platform through pipes to a manifold and then through a series of pipes to separators and testing equipment on the B side of the complex. After the initial separation of the liquid hydrocarbons from the gas, the gas flowed through a sales meter and into a pipeline.

In addition to the two structures forming the A-B complex, Enron also operated a nearby satellite platform. The satellite platform supported three gas wells which Enron had completed in 1993 and 1994. However, the satellite platform lacked its own separators and testing facilities, so Enron needed to move the flow of gas from the wellheads on the satellite platform to the equipment on the A-B complex. Enron could not produce the new wells until it connected the satellite platform to the A-B complex.

Enron contracted with Offshore Pipeline, Inc. (“OPI”) to lay a pair of pipelines between the satellite platform and the A-B complex. Enron’s agreement with OPI also required OPI to install risers, at the ends of the pipelines to facilitate the connection of the new wells on the satellite platform to the new pipelines, and, in turn, the new pipelines to the existing manifold located on the A-B complex. 2

After the installation of the pipelines, Enron needed to connect the wells on the satellite platform to the risers installed by OPI. Enron also needed to attach the risers running up the leg of the A platform to the existing manifold. Moreover, the inclusion of the production from the three new wells required modifications to the safety system located on the A-B complex. Enron hired Dynamic Offshore Contractors (“Dynamic”) to perform these portions of the job. Enron and Dynamic had previously entered into a master service contract which contained a provision requiring Dynamic to indemnify Enron for damages caused by Enron’s negligence. 3 Pursuant to the master service contract, Enron solicited and accepted Dynamic’s bid to complete the tie-in of the satellite platform. The work order between Enron and Dynamic called for Dynamic to perform several tasks on both the satellite platform and the A-B complex. On the satellite platform, Dynamic fabricated and installed a manifold, connected flowlines from the three individual Christmas trees to the new manifold, and installed a pneumatic safety system. 4 On the A-B complex, Dy *337 namic installed piping from the risers installed by OPI to the existing manifold, modified the safety shutdown system on the A platform to incorporate the two new incoming pipelines, and installed shut down valves and check valves. These modifications allowed the operator to segregate the product from each individual well for testing and enabled the operator to shut in any particular well in case of an emergency.

During the project, Daniel Koonce ("Koonce") and Horace Brewer ("Brewer"), two Dynamic employees, were injured while being lowered in a personnel basket from the satellite platform onto the deck of a boat owned by John E. Graham & Sons ("Graham"). OCS, Inc. ("OCS") employed the crane operator. At the time of the accident, Brewer and Koonce were installing connecting spools in a riser attached to the satellite platform. This case arose in admiralty when Graham filed a petition seeking exoneration from or a limitation of liability in response to the personal injury claims made by Brewer and Koonce. When Brewer and Koonce filed cross-claims against Enron, Enron demanded that Dynamic honor the indemnity covenant contained in the master service contract. Dynamic refused, prompting Enron to file a third party action against Dynamic for breaching the indemnity provision.

The parties settled the personal injury claims for $550,000. Thereafter, the district court held a bench trial to apportion fault among OCS, Enron and Graham. 5 The court found that OCS bore the majority of responsibility, at 75%. The court found Enron 20% at fault, and Graham, 5%. The only remaining question was whether the indemnity provision between Dynamic and Enron was enforceable under the Texas Oilfield Anti-Indemnity Act ("TOAIA"). The court originally invalidated the provision but, on rehearing, revisited the issue and enforced it. Having concluded that Dynamic owed Enron an indemnity obligation, the district court awarded Enron $110,000 against Dynamic (representing 20% of the total settlement), plus an additional $56,200 in attorney's fees and costs. Dynamic appeals, asserting that the indemnity provision of the master service contract is unenforceable under the Texas Oilfield Anti-Indemnity Act ("TOAIA").

II.

A. APPLICABLE LAW AND STANDARD OF REVIEW

The parties have agreed that Texas law governs this dispute. Because the facts in this case are undisputed, we turn to the question whether the indemnity provision is enforceable under Texas law. We review the district court's determination of Texas law de novo. Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1220-21, 113 L.Ed.2d 190 (1991). We apply the law of Texas as announced by that state's highest court, or, in absence of such a decision, we must predict what the highest court would decide if it confronted the same issue. Transcontinental Gas v. Transportation Ins. Co., 953 F.2d 985, 988 (5th Cir.1992). In this case, there is an absence of authority from the Texas Supreme Court on the dispositive issue. Therefore, we must anticipate what that court would do under these facts.

Under Texas law governing statutory construction, the primary objective of a court is to give effect to the Legislature's *338 intent. Mitchell Energy Corp. v. Ashworth, 943 S.W.2d 436, 438 (Tex.1997). In ascertaining legislative intent, Texas courts would consider the object to attain, the circumstances of the statute’s enactment, legislative history, former statutory and common law, and the consequences of a particular construction. Tex.

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