Olsen v. Shell Oil Co.

595 F.2d 1099, 1980 A.M.C. 1207
CourtCourt of Appeals for the Fifth Circuit
DecidedMay 25, 1979
DocketNo. 75-4019
StatusPublished
Cited by36 cases

This text of 595 F.2d 1099 (Olsen v. Shell Oil 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
Olsen v. Shell Oil Co., 595 F.2d 1099, 1980 A.M.C. 1207 (5th Cir. 1979).

Opinion

FAY, Circuit Judge:

This controversy involves the explosion of an electric water heater situated in the living quarters of a drilling platform owned by Shell Oil Company (Shell). The drilling was being conducted from the platform by Movible Offshore Inc. (Movible) which had entered into a standard drilling contract with Shell. The insurance company for Movible until November, 1969 was Pacific Employers Insurance Company (Pacific), an affiliate of the Insurance Company of North America (INA). The policy of insurance issued by Pacific to Movible contained the following language with respect to safety inspections:

The Company and any rating authority having jurisdiction by law shall each be permitted but not obligated to inspect at any reasonable time the work places, operations, machinery and equipment covered by this policy. Neither the right to [1102]*1102make inspections nor the making thereof nor any report thereon shall constitute an undertaking on behalf of or for the benefit of the insured or others, to determine or warrant that such work places, operations, machinery or equipment are safe.

Under Movible’s own inspection program daily inspections took place directed by the Movible toolpusher and weekly visitations to the rigs were made by Movible’s Drilling Superintendent and his assistant. There were also daily safety meetings before each crew went to work and there were weekly safety meetings in which all men in the movable rig in the platform participated. Throughout the policy period with Pacific, Movible continued to perform safety inspections. INA also conducted periodic safety inspections of the rigs. On January 22-23 INA’s inspector, Gilbert J. Stansbury, inspected the hot water heaters in the pantry and in the galley of the living quarters on the rig. Stansbury made recommendations in writing to Carroll Desormeaux, the Movible toolpusher who accompanied him in the inspection. One of Stansbury’s recommendations was that the fusible plug relief valves be changed to temperature pressure relief valves. Prior insurers had also made the same recommendation to Movible with respect to these valves. Instead of ordering pressure-temperature relief valves, however, Movible ordered and installed pressure relief valves. Toolpusher Carroll Desormeaux neglected to tell Movible’s purchasing agent that the valves were to be placed on hot water heaters. On January 29,1969, Movible placed an order with the area Tex-steam distributor, Pneumatic Service and Equipment, Inc. for two % inch, 5550 Tex-steam relief valves set at 125 pounds. The valves were replaced on February 3, 1969 and on October 7, 1969 Stansbury returned to the rig and interviewed Desormeaux’s replacement, Wyman Haas. In his deposition Stansbury stated that if Haas had verbally assured him that the proper valves had been installed, he would have taken Haas’ word for it.

On November 1, 1969, INA lost the Teledyne account (which included Movible Offshore Inc.) to Argonaut which provided Movible’s insurance at the time of the explosion on May 6, 1970. Argonaut intervened in all of these consolidated cases; it also filed a separate suit against the various defendants to recover the money paid on behalf of the injured parties.

In our previous opinion we held that Shell was not liable for breach of certain federal regulations issued by the Secretary of the Interior pursuant to the authority granted to the Secretary by the Outer Continental Shelf Lands Act, 43 U.S.C. § 1334 because the Act did not specifically provide a civil remedy for violations of the statute or regulations and because we felt this was not the type of situation in which a cause of action should be implied or created.1 We also concluded that in view of the fact that there was no clear precedent it was impossible to rule on the issue of Shell’s liability under Louisiana Civil Code Art. 2322. Therefore, we certified the question to the Louisiana Supreme Court which held that Shell was strictly liable under Article 2322. Olsen v. Shell Oil Co., 365 So.2d 1285 (La. 1977).

As far as the remaining issues we find that 1) the trial court was correct in granting indemnity to Shell; 2) the holding that Movible was negligent and that this negligence was the proximate cause of plaintiffs’ injuries was not clearly erroneous; 3) the holding that the Texsteam valve was not defective was not clearly erroneous; 4) there was sufficient evidence from which the trial judge could have determined that the INA inspector was not negligent; 5) in view of the decision by the Louisiana Supreme Court, the trial court’s conclusion that to allow Argonaut to maintain its suit would serve no purpose was incorrect.2

[1103]*1103I. Indemnity to Shell Oil Corporation

The trial court found that under an agreement between Shell and Movible the latter was obligated to indemnify Shell for negligence on its part causing liability to Shell.

A contract to indemnify and hold harmless, if applicable, includes payment of costs and attorney’s fees incurred by the indemnitee (Shell). See Loffland Bros. Co. v. Roberts, 386 F.2d 540, 550-551 (5th Cir. 1967). Movible (the indemnitor) argues, however, that no one can obtain indemnity from an employer for injuries or losses sustained by its employees because workmen’s compensation is intended to be the exclusive liability of the employer. It is true that Movible’s exclusive liability to its employees is under the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U.S.C. § 905. Although Movible is not liable to plaintiffs for negligence because Section 5 of the Act destroys any underlying tort liability on the part of the employer, Robin v. Sun Oil Co., 548 F.2d 554, 556 (5th Cir. 1977), Shell is not barred from recovering under the indemnity contract executed by both parties.

In Ocean Drilling & Exp. Co. v. Berry Bros. Oilfield Service, 377 F.2d 511 (5th Cir.), cert. denied, 389 U.S. 849, 88 S.Ct. 102, 19 L.Ed.2d 118 (1967), this Court held that the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U.S.C. § 905 makes workmen’s compensation benefits the exclusive liability of an employer to its employees or to anyone claiming under or through such employee. 377 F.2d at 514 quoting Ryan Stevedoring Co. v. Pan-Atlantic SS Corp., 350 U.S. 124, 129, 76 S.Ct. 232, 235, 100 L.Ed. 133 (1956).3 This Court in Berry Bros, refused to extend the Ryan doctrine to the facts of that case where the injuries were sustained on a stationary offshore platform rather than a vessel.4 Similarly, in the case before us the injuries occurred on a stationary offshore platform. This Court held in Berry Bros, that ODECO was not entitled to recovery under the warranty of workmanlike performance expounded by the Ryan case nor under maritime tort principles. 377 F.2d at 513. However, Berry Bros,

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Bluebook (online)
595 F.2d 1099, 1980 A.M.C. 1207, Counsel Stack Legal Research, https://law.counselstack.com/opinion/olsen-v-shell-oil-co-ca5-1979.