### IN THE UNI TED STAT ES COURT OFAPPEALS FOR THE FIF TH CIRCU IT

No. 12-20080

ACE AMERICAN INSURANCE COMPANY, Plaintiff - Appellee

v. M-I, L.L.C., Defendant - Appellant

Appeal from the United States District Court for the Southern District of Texas

Before HIGGINBOTHAM, ELROD, and HAYNES, Circuit Judges. PATRICK E. HIGGINBOTHAM, Circuit Judge: The district court granted a motion for partial summary judgment, finding that the O u t e r Continental Shelf Lands Act (“OCSLA”) applied to the parties’ contractual dispute, and thus, pursuant to the OCSLA choice of law provision, L ouisiana law applied, under which the Louisiana Oilfield Indemnity Act (“LOIA”) invalidated the indemnity provisions. M- I , L.L.C. (“M-I”) timely appealed. M-I has provided performance fluids management services for British Petroleum’s (“BP”) drilling opera t ions at multiple locations throughout the United States for over twelve years. M-I and BP entered into a Master Services Agreement (“M SA”), effective February 1, 2009, which governed all future off s h o r e dri lling services that M-I would perform for BP on both vessels and U n i te d S ta te s C o u rt o f A p p ea l s

F i ft h C i rc u i t 

### F I L E D Octob er 19 , 20 12 Lyle W . Cayce Clerk Case: 12-20080 Document: 00512026575 Page: 1 Date Filed: 10/19/2012No. 12-20080

stationary platforms in the Gulf of Mexico. Although the MSA included detailed terms, it did not itself call for the performance of any work. Instead, it provided that BP would issue work orders for work to be performed by M-I, which M-I was not obligated to accept. In practice, BP did not issue formal work orders to M-I. Rather, M-I assigned a team of its employees to work at BP’s offices with BP employees so that BP could communicate directly t o M -I, often orally, when it needed M-I to perform work. The current dispute concerns th e MSA’s indemnification provisions and the insurance agreements supporting M-I’s indemni f ication obligations. Specifically, the MSA obligated M-I to indemnify BP for personal injury claims asserted by M-I employees arising from or relating to performance of the MSA. The MSA required M-I and BP to support their indemnity obligations with insurance. As required, M-I proc u r e d from ACE American Insurance Co. (“ACE”) both a workers’ compensation/ e m ployers’ liability policy and a commercial general liability policy, requiring ACE to indemnify and defend M-I against workers’ compensation claims brought by i t s e m p loyees and against

c l a ims by its employees arising in the course of their employment. T h e commercial general liability policy also covered M-I’s contractual obligations to indemnify third-parties such as BP. Charles Herandez, a M-I employee who had worked on numerous vessels and pl a t f

o r ms operated by different companies, including BP, was injured in October 2009 while working aboard the Thunde r H o r s e , a stationary platform operated by BP. Hernandez filed a workers’ compensation claim against M-I as

w e l l a s a personal injury lawsuit against M-I and BP in Texas state court

. I n accordance with the indemnity terms in the MSA, BP ten d e r e d Hernandez’s claims in the state court lawsuit to M-I and M-I accepted BP’s tender. M-I entered into a settlement of all of Hernandez’s claims. ACE then filed an action for declaratory judgment, seeking a declaration that ACE does not owe M-I coverage payments for any claims asserted against
2 Case: 12-20080 Document: 00512026575 Page: 2 Date Filed: 10/19/2012No. 12-20080

M-I or BP in Hernandez’s suit. M-I filed state law counterclaims against ACE for breach of contract a n d vi o l at ions of Chapters 541 and 542 of the Texas Insurance Code. M-I moved for summary judgment as to its counterclaims and ACE moved for partial summary judgment on the applicability of OCSLA to the dispute. The district court granted AC E ’ s m otion for partial summary judgment. We affirm.

I. The sole issue on appeal is whether, pursuant to the OCSLA, Louisiana law governs the indemnity provisions. 43 U.S.C. § 1333(a), the OCSLA choice of law provision, provides: (1) The Constitution and laws and civil and political jurisdiction of t h e United States are extended to the subsoil and seabed of the out e r C o n t inental Shelf and to all artificial islands, and all installations and other devic e s p er m an e ntly or t e m p or arily attached to the seabed , w h i c h may be erected thereon for the purpose of exploring for, developing, or producing resources therefrom, or any such installation or other device (other than a ship or vessel) for the purpose of transporting such resources, to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction located within a State . . . . (2)(A) To the extent that they are applicable and n o t inconsistent with this subchapter or with other Federal laws and regulations of the Secretary now in effect or hereaf t e r a dopted, the civil and criminal laws of ea c h a d jacent State, now in effect or hereafter adopted, amended, or repealed are declared to be the law of the United States for that portion of the subsoil and seabed of the outer Continental Shelf, and artificial islands an d f ixe d s tructures erected thereon, wh i ch would be within the area of the State if its boundaries were extended seaward to the outer margin of the outer Continental Shelf . . . . 1

43 U. S. C. § 1 333( a). 1 3 Case: 12-20080 Document: 00512026575 Page: 3 Date Filed: 10/19/2012No. 12-20080

If, pursuant to the OCSLA, the adjacent law of Louisiana applies, then the LOIA would invalidate the indemnity agreements at issue. The LOIA provides: Any provision contained in, collateral to, or affecting an agreement pertaining to a well for oil, gas, or water, o r dri l l i ng for minerals which occurs in a solid, liquid, gas e ous, or other state, is void and unenforceable to the ext e n t t hat it purports to or does provide for defense or indemnity, or either, to the indemnitee against loss or liability for damages arising out of or resulting from death or bodily injury to persons, whi c h i s caused by or results from the sole or concurrent negligence or fault (strict liability) of the indemnitee, or a n a g e nt, employee, or an independent contractor who is directly responsible to the indemnitee. 2
The district court below found that the OCSLA applied, under which the LOIA invalidated the indemnity provisions. We agree. Under United Texas Petroleum Corp. v. PLT Engineering, I nc. , three requirements must be met for state law to apply as surrogate federal law under the OCSLA. First, “[t]he controversy must ari se on a situs covered by the OCLSA (i.e. the subsoil, seabed, or artificial s t r u c t u r es permanently or temporarily attached thereto).” Second, “[f]ederal maritime law must not apply 3 of its own force.” Third, “[t]he state law must not be inconsistent with Federal 4 law.” The parties do not dispute the third requirement—that state law is not 5 inconsistent with federal law. The district cour t found all three requirements

were met and granted ACE’s motion for partial summary judgment on the issue of the OCSLA’s applicability. We affirm the district court’s judgment.

LA

. R EV

. S TAT

. § 9 :278 0(B)

. 2
Uni ted Tex

. Petroleum Corp

. v. PLT Eng’g, I nc. , 895 F.2d 1043, 1047 (5t h Cir. 1990)

. 3
Id. 4
Id. 5
4 Case: 12-20080 Document: 00512026575 Page: 4 Date Filed: 10/19/2012No. 12-20080 II. “This Court reviews de novo a district court order grantin g a motion for

s u mmary judgment, applying the same standards as did the district co u r t

. ” 6 Under Rule 56, “[t]he court shall grant summary judgment if the movant shows that there i s n o g e n uine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 7

A. Turning to the first requirement of the PLT test, the controversy at issue must arise on an OCSLA situs, namely the seabed, subsoil, and fixed structures of the outer Continent a l S h e l f

. We find the indemnity dispute arises on an OCSLA situs, specifically on a stationary platform. The situs of the controversy in a contractual dispute depends on the focus of the contr a c t

. Under the focus-of-the-contract test, a contractual dispute 8 “arises under an OCSLA situs if a majority of the work called for by the contract is on stationary platforms or other enumerated OCSLA situses.” I n articulating 9 the focus-of-the-contract test in Grand Isle Shipyard, Inc. v. Seacor Marine LLC, this Court specifically explained the analysis to be used when the parties have entered into a blanket agreement that does not itself call for the performance of specific work. It explained: 1 0 As we di s c ussed in Davis & Sons v. Gulf Oil Corp. , it is a common practice for companies c o n t racting for work in the oilfield to enter

Grea ter Ho us. Sma ll Tax ic ab Ow ners As s’n v. City of Ho uston , 660 F.3d 235, 238 (5t h 6 Cir. 201 1) (quo ting DePreev . Saunde rs , 588 F.3d282 , 286 (5t h Cir

. 2009) ).
Fed

. R. Civ. P. 56. 7
Grand Isle Shipyar d, Inc. v. Seac or Ma ri ne, LLC, 589 F.3d 778, 784 (5t h Cir. 2009) 8 (enban c)

. Id. at 787. 9
Id. atn. 6. 1 0 5 Case: 12-20080 Document: 00512026575 Page: 5 Date Filed: 10/19/2012No. 12-20080

into contracts in two stages. Typ i c ally, they first sign a “blanket contract” that may remain in place for an extended period of time. Later, they issue work orders for the performance of specific work, which usually incorporates the terms of the blanket contract. As we said in Davis & Sons , where t h e c o n t r act consists of two parts, a blanket “contract followed b y l a t er work order, the two must be interpreted together.” Generally, each w ork order is for a discrete, relatively short-term job. Unless a contrary intent is reflected by the master contract and the work order, in determining situs in a contract case such as this, courts should ordinarily look to the location where the work is to be performed pursuant to the specific work order rather than the long term blanket contract. 1 1
We conclude that G rand Isle governs M-I’s appeal. Here, M-I and BP entered into a “blanket” MSA. Although the MSA included detailed terms, even stipulating the platforms and vessels on which M-I may perform work for BP, it did not call f

o r a ny specific work to be performed. Instead, the MSA required specific job assignments, such that those job assignments, incorporating the t e r m s of the MSA, converted the MSA into a contract governing work. U n d e r the MSA, BP was not obligated to request work from M-I and M

- I was not obligated to accept work orders issued by BP. That BP did not issue a formal work order to M-I for Hernandez’s work on the Thunder Horse is not determinative; the MSA did not require formal work orders. Some direction was needed to authorize M-I to perform work for BP and M-I’s creation of service tickets and time sheets, tied to each particular platform

or vessel where M-I performed work under the MSA, provide evidence of the location where work was to be performed pursuant to the specific work order as well as the scope of that particular work order. Under Grand Isle we look to the location of the m aj ority of the work pursuant to the specific work order. Focusing on the location of the specific work order is not a return to the

Id. (c itat ions om itt ed)

. 1 1 6 Case: 12-20080 Document: 00512026575 Page: 6 Date Filed: 10/19/2012No. 12-20080

“fortuitous” location of the injury appro a c h

. There is nothing fortuitous about determining the applicable l a w b y looking to the location of the specific work order.

B. Turning to the second requirement of the PLT test, in order for the OCSLA choice of law provision to apply , m a rit ime law must not apply of its own force. Determining whether maritime law applies of its own force involves a two-step inquiry—first, an examination of the historical treatment o f contracts of that type in the jurisprudence and second, a six-factor “fact-specific” inquiry into the nature of the contract. Here, the district court found that maritime law did not 1 2 apply because the work He rnandez performed on the Thunder Horse was not maritime in nature. We agree. Under Davis & Sons, Inc. v. Gulf Oil Corp. , explicitly endorsed in Grand Isle , we must analyze whether the particular work order, n o t th e blanket contract, is maritime in nature. Because the relevant contract here—the work 1 3 assignment Hernandez was completing on the Thunder Horse—was performed

on a stationary platform, not a traditional maritime activity, it follows that maritime law does not apply of its own force to the indemnity dispute.

Da vi s & Sons, Inc. v. Gu lf Oi l Corp

. , 919 F.3d 313, 316 (5t h Cir. 1990)

. The six 1 2 fac tor s are: (1) What doe s the sp ecif ic wo rk ord er in eff

ect at the tim e of injury pr ovide ? ( 2) What wo rk did the cre w ass igned unde r the wo rk ord er act ually do? (3) Was the cre w ass igned t o wo rk aboar d a vess el in navigable wa ter s? (4) To wh at exten t did the wo rk be i n g d o n e rela te to the mi ss ion of thatvess el? (5) Wh at wa s the princip al wo rkof t he injure d wo rk er? (6) Wh at wo rkw as the injure d wo rk ing d oing at the tim e o f the injury? Id.

Id. at 315 (“ If, as inthis c ase , the cont rac t cons ist s of tw o p art s, a blank et cont rac t 1 3 fol low ed by late r wo rk ord ers , t h e t w o mus t be inte rp ret ed toget her in evaluat ing wh ethe r mar itim e or land law is app licable to the inte rp re t a t i o n and enf orc eabil ity of the cont rac t’s pr ovis ions . The blanke t cont rac t is notof it se lf com ple te and call s fornos pec ifi c wo rk

. The act ual cont rac t betw een the par tie s ther efo re cons ist s of the blank et agree me nt as mo dif ied by t he late r wo rkor der .” ). 7 Case: 12-20080 Document: 00512026575 Page: 7 Date Filed: 10/19/2012No. 12-20080 III. The parties do not dispute the third require m ent of the PLT test—that state law not be inconsistent with federal law. We agree with the district court’s analysis of the issue and see no need to further address it here.

IV. We AFFIRM.

8 Case: 12-20080 Document: 00512026575 Page: 8 Date Filed: 10/19/2012