Smith v. Tenneco Oil Co.

803 F.2d 1386, 1987 A.M.C. 1681
CourtCourt of Appeals for the Fifth Circuit
DecidedNovember 10, 1986
DocketNo. 86-4040
StatusPublished
Cited by21 cases

This text of 803 F.2d 1386 (Smith v. Tenneco 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
Smith v. Tenneco Oil Co., 803 F.2d 1386, 1987 A.M.C. 1681 (5th Cir. 1986).

Opinion

CLARK, Chief Judge:

Tenneco Oil Company (Tenneco), the owner of an offshore drilling platform, and Operators, Inc. (Operators), the company conducting drilling operations on the platform, appeal the district court’s denial of Operators’ claim for indemnity from John E. Graham & Sons (Graham), the owner and operator of the M/V MARGARET G, a vessel chartered by Tenneco. Tenneco also [1387]*1387appeals the district court’s limitation of Tenneco’s recovery of indemnity from Graham, and the district court’s determination that Tenneco and Operators were not covered by a protection and indemnity policy issued to Graham by Highlands Insurance Company (Highlands). Graham cross-appeals the district court’s holding that Tenneco was entitled to indemnity from Graham, and the district court’s failure to grant Graham indemnity from Danos & Curóle Marine Contractors, Inc. (Danos & Curóle), a firm having a service contract to perform support services for Tenneco. Danos & Curóle was also the employer of the injured plaintiff, Michael J. Smith.

We reverse the district court’s holding that Tenneco is entitled to indemnity from Graham. We affirm the remainder of the judgment.

I.

Smith and his wife filed suit against Tenneco, Operators, Danos & Curóle, and Graham. Tenneco and Operators cross-claimed against Graham for indemnity under the Blanket Time Charter between Tenneco and Graham. They also cross-claimed against Graham for indemnity as additional assureds under Graham’s protection and indemnity policy from Highlands. Danos & Curóle intervened in the suit as Smith’s employer for reimbursement of worker’s compensation and medical payments totaling $54,338.00. Danos & Curóle cross-claimed against Graham for indemnity as a beneficiary of the contract between Tenneco and Graham. In response, Graham cross-claimed for indemnity against Danos & Curóle as a beneficiary of the contract between Tenneco and Danos & Curóle.

After opening statements to the jury, a settlement was reached between the plaintiffs, Tenneco, Operators and Danos & Cu-role. The plaintiffs dismissed their claims against all defendants except Graham and received $130,000.00. Tenneco and Operators settled their claim for indemnity against Danos & Curóle. Danos & Curóle advanced $50,000.00 and waived its intervention. Tenneco and Operators assumed Danos & Curole’s cross-claim against Graham. The plaintiffs agreed to defend and indemnify Danos & Curóle against the indemnity claim of Graham for any amount above the $50,000.00 Danos & Curóle paid to Tenneco & Operators. The plaintiffs’ claim against Graham proceeded.

II.

Smith was injured while being lowered in a personnel basket from Tenneco’s oil platform in the Gulf of Mexico to the deck of the M/V MARGARET G. Operators was a wholly owned subsidiary of Tenneco. The jury determined that at the time of the accident, Smith was a borrowed employee of Operators. The jury also determined the accident was solely caused by the negligence of Operators’ crane operator. The crane operator’s foot slipped off the brake when he sat up to get a better view.

At the time of the accident, the M/V MARGARET G had been called by Operators to pick up passengers from the platform. The jury found that the vessel was not at fault in the accident in any way.

On the cross-claims, the district court held that Graham did have an obligation under the Blanket Time Charter to indemnify Tenneco but did not have an obligation to indemnify Operators or Danos & Curóle. The district court limited Graham’s obligation to indemnify Tenneco to the costs and fees incurred prior to the time the court determined Tenneco should have moved for summary judgment. The district court held Graham was not entitled to indemnity from Danos & Curóle, and that Tenneco and Operators were not covered by Graham’s insurance policy from Highlands.

III.

On appeal, Tenneco and Operators assert that the district court erred in deciding that the Blanket Time Charter between Graham and Tenneco did not provide indemnity protection to Operators and did not cover all of Tenneco’s legal costs and attorneys fees. These issues are moot because we find that [1388]*1388the indemnity provision in the Charter did not apply to the negligent operation of a crane on Tenneco’s platform.

Interpretation of the indemnity clause in the context of this action presents a matter of law that is reviewable de novo on appeal. Kemp v. Gulf Oil Corp., 745 F.2d 921, 924 (5th Cir.1984). Indemnity agreements are to be strictly construed. Marathon Pipeline v. Drilling Rig ROWAN/ODESSA, 527 F.Supp. 824, 835 (E.D.La.1981), aff'd, 699 F.2d 240 (5th Cir.1983), cert. denied, 464 U.S. 820, 104 S.Ct. 82, 78 L.Ed.2d 92. In two prior cases involving very similar facts, panels of this court have held that indemnity provisions in charter parties do not apply to the negligent operation of a crane on the charterer’s drilling platform. In Lanasse v. Travelers Insurance Co., 450 F.2d 580, 583 (5th Cir.1971), the indemnity provision in the charter applied to claims “directly or indirectly connected with the possession, management, navigation, and operation” of the vessel. This court held the provision did not cover injuries that occurred when a crane operator on the drilling platform allowed a load to swing into a worker on the vessel’s deck. As in this case, the crane operator’s negligence was found to be the sole cause of the injury. The court stated:

As broad as these terms are to comprehend injuries caused by the operation of the vessel in a practical sense, they do not comprehend an occurrence in which the vessel’s sole contribution is to be there as the carrier from which the cargo is being removed.

Id. at 583.

Lanasse was followed in Hobbs v. Teledyne Movible Offshore, Inc., 632 F.2d 1238 (5th Cir.1980). The indemnity provision in Hobbs contained the same wording as in Lanasse. The facts in Hobbs were even closer to the present case. The plaintiff was injured while being transferred by a crane from the drilling platform to a crew boat. A jury determined the accident was solely due to the crane operator’s negligence. The panel affirmed the district court’s holding that the vessel was not obligated to indemnify the plaintiff’s employer because “the operation of the crane was not even remotely related to the operation, navigation or management of the vessel.” Id. at 1241.

In this case, the district court attempted to distinguish Hobbs and Lanasse from the present case due to differences in the contract language.1 The district court pointed out that the provision in the present case applies to any claim that “arises out of or is incident to performance” of the charter agreement, whereas the provisions in Hobbs and Lanasse applied to claims “connected with the possession, navigation, management and operation of the vessel.” This is a distinction without a substantial difference. The performance of the charter in the present case involves possession, navigation, management and operation of the vessel.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Dahlen v. Gulf Crews, Inc.
281 F.3d 487 (Fifth Circuit, 2002)
Gaspard v. Offshore Crane
Fifth Circuit, 1997
Gaspard v. Offshore Crane & Equipment, Inc.
106 F.3d 1232 (Fifth Circuit, 1997)
Baza v. Chevron Oil Service Co.
972 F. Supp. 375 (E.D. Louisiana, 1996)
Randall v. Chevron U.S.A., Inc.
788 F. Supp. 1391 (E.D. Louisiana, 1992)
Rodrigue v. Legros
552 So. 2d 703 (Louisiana Court of Appeal, 1989)
Farren v. General Motors Corp.
708 F. Supp. 436 (D. Massachusetts, 1989)
Daughdrill v. Ocean Drilling & Exploration Co.
702 F. Supp. 1267 (E.D. Louisiana, 1988)

Cite This Page — Counsel Stack

Bluebook (online)
803 F.2d 1386, 1987 A.M.C. 1681, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-tenneco-oil-co-ca5-1986.