Jones v. Berwick Bay Oil Co., Inc.

697 F. Supp. 260, 1988 U.S. Dist. LEXIS 11649, 1988 WL 109630
CourtDistrict Court, E.D. Louisiana
DecidedSeptember 27, 1988
DocketCiv. A. 86-5504
StatusPublished
Cited by1 cases

This text of 697 F. Supp. 260 (Jones v. Berwick Bay Oil Co., Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jones v. Berwick Bay Oil Co., Inc., 697 F. Supp. 260, 1988 U.S. Dist. LEXIS 11649, 1988 WL 109630 (E.D. La. 1988).

Opinion

ORDER AND REASONS

MENTZ, District Judge.

This matter comes before the Court on cross motions for summary judgment filed by defendants, Shell Offshore, Inc. (Shell) and Berwick Bay Oil Company, Inc. (Ber-wick Bay). The memoranda filed by the parties presents the following issues for the Court: 1) Whether, under the terms of the contract, Berwick Bay’s duty to indemnify Shell was triggered by plaintiffs accident and 2) if so, whether the Louisiana Oilfield Anti-Indemnity Act applies to Shell’s cross-claim for indemnity. The Court decides both of these issues in the affirmative. In deciding the second issue, the Court must determine the nature of a blanket contract to supply fuels and greases for use, in part, by Shell’s vessels. The Court holds that the contract is a “mixed” but primarily non-maritime contract, and that admiralty jurisdiction over the contract is invoked only as to fuel which is delivered to a specified vessel pursuant to a work order issued by Shell. In so ruling, the Court addresses what has been characterized as an uncertain question of admiralty law: whether a blanket contract to supply fuel for use by vessels engaged in a maritime activity is a maritime contract. Since the subject accident occurred while the plaintiff was performing a nonmaritime obligation of the contract, state law shall govern Shell’s cross-claim for indemnity.

Facts

Toby Jones filed this action to recover for personal injuries he sustained on August 30, 1986 while working as a tanker-man for his employer, Berwick Bay. Jones alleges that he stepped on grease or oil on the edge of a dock leased by Shell, slipped, and fell onto a barge owned by Berwick Bay. At the time of his accident, Jones had just transported diesel fuel from Ber-wick Bay’s main tank facility in Morgan City to its tanks located at Shell’s Morgan City Terminal. Jones was injured while returning to the barge after checking the fuel gauge on Berwick Bay’s fuel storage tanks.

Pursuant to a purchase order contract with Shell, Berwick Bay provides diesel fuel, oils, greases, and lubricants as required by Shell. The purchase order contract provides in pertinent part as follows:

... Contractor [Berwick Bay] ... [shall furnish] ... all necessary tools and equipment, materials, ... labor and supervision ... to ... provide and deliver as required/requested No. 2 API or 45 Cetane diesel fuel ... and/or Shell branded oils, greases and lubricants on a first call basis as required to support Shell’s exploration and production programs serviced by/out of Shell’s Morgan City Terminal to include but not limited to the requirements for all drilling rigs, supply boats and crew boats owned by or operated under contract to Shell and all production platforms and/or gas plants and other production facilities located in the following production units: ...

Thus, this is a blanket contract whereby Berwick Bay agrees to sell and deliver and Shell agrees to purchase and receive, at *263 enumerated prices, all the fuel, oils, greases, and lubricants which Shell might require for a period of one year to fuel vessels engaged in maritime activities and to support other aspects of Shell’s offshore exploration and production programs. 1

The contract does not address matters preliminary to the performance of the contract. For example, it does not specify the method by which Berwick Bay shall transport fuel and greases to Shell’s terminal. Though Berwick Bay could have used a truck to transport the fuel to its storage tanks, it chose to transfer the fuel by barge. Berwick Bay’s fuel barge would moor at Shell’s dock. The storage tanks were located in an open field next to the fuel transfer station, which was dockside. The fuel was pumped from Berwick Bay’s barge, through the fuel transfer station, to the fuel storage tanks. The fuel was kept in the storage tanks until Shell issued a request for fuel, at which time the fuel was sold to Shell. Berwick Bay would pump the fuel from the storage tanks, through the fuel transfer station, and onto Shell’s vessels for offshore use or for use by the vessels. Shell did not issue work orders for Berwick Bay to fill Berwick Bay’s fuel storage tanks. Rather, Berwick Bay was responsible for doing so on its own in order to meet its contractual obligations to Shell. Shell had not requested or purchased the fuel being transferred at the time of plaintiff’s accident.

The other lubricants which Berwick Bay furnished to Shell were containerized and stored at Berwick Bay’s warehouse in Morgan City adjacent to Shell’s terminal. When Shell issued a request for these lubricants, they were transferred from the warehouse to the vessels via forklift trucks.

The amount of diesel fuel Berwick Bay supplied to Shell far exceeded the amount of other lubricants supplied to Shell. All the diesel fuel and most of the other lubricants were used for offshore purposes.

Jurisdiction

The Court has federal question jurisdiction over the Jones Act and general maritime law claims asserted by plaintiff against Berwick Bay. Plaintiff’s negligence and strict liability claims against Shell are based solely on state law, yet there is no diversity of citizenship between the parties. Nevertheless, the court has pendant-party jurisdiction over the state law claims because they arise from the same common nucleus of operative fact as the Jones Act and general maritime law claims. See Feigler v. Tidex, Inc., 826 F.2d 1435 (5th Cir.1987). The Court has ancillary jurisdiction over the cross-claim asserted by Shell against Berwick Bay because it arises from the same transaction or occurrence as the main demand. F.R.Civ.P. 13(g).

7. Whether, under the terms of the contract, Berwick Bay’s duty to indemnify Shell was triggered by plaintiffs accident

Berwick Bay argues that its contractual duty to indemnify Shell arises only when an accident occurs in connection with a work order issued pursuant to the blanket agreement (the purchase order contract). Berwick Bay was not operating under a work order at the time of the accident. Rather, Berwick Bay was filling its own fuel storage tanks in anticipation of selling the fuel to Shell. Therefore, Berwick Bay argues that its indemnity obligation was not triggered by the accident. However, Shell contends that an injury sustained while Berwick Bay is performing an obligation relating to the blanket agreement triggers Berwick Bay’s duty to indemnify Shell.

This particular purchase order contract differs from the usual master service agreement which may or may not be followed by a work order, and which becomes a binding contract only upon the issuance of the work order. See e.g., Matte v. Zapata Offshore Co., 784 F.2d 628, 630 (5th *264 Cir.1986); Page v. Gulf Oil Corp., 775 F.2d 1311, 1314 (5th Cir.1985).

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Cite This Page — Counsel Stack

Bluebook (online)
697 F. Supp. 260, 1988 U.S. Dist. LEXIS 11649, 1988 WL 109630, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jones-v-berwick-bay-oil-co-inc-laed-1988.