Opinion ID: 25349
Heading Depth: 2
Heading Rank: 3

Heading: Use of Wireline Perforation Gun an Ultrahazardous Activity under Louisiana Law.

Text: 38 The Plaintiffs appeal the district court's grant of summary judgment in favor of Kerr-McGee, dismissing their claims for vicarious and strict liability under Louisiana Civil Code arts. 2315 and 667. They assert that the district court erred when it determined that Kerr-McGee's independent contractor, Cardinal, was not engaged in an ultrahazardous activity while using the perforating gun in conducting the p&a job for Kerr-McGee. The Plaintiffs focus particularly on the district court's refusal to include wireline perforation within the ultrahazardous category of blasting with explosives. Agreeing that wireline perforation is not congruent with blasting with explosives as that term is used in art. 667, and being convinced that wireline perforation does not satisfy Louisiana's broader jurisprudential test for ultrahazardous activities, we affirm the district court's grant of Kerr-McGee's summary judgment dismissing the Plaintiffs' claims under arts. 2315 and 667. 39
40
41 Before we proceed to analyze the Plaintiffs' negligence and vicarious liability claims against Kerr-McGee, an abbreviated review of the application of Louisiana's basic tort provision, art. 2315, appears to be in order. That article states that [e]veryact whatever of man that causes damage to another obliges him by whose fault it happened to repair it. 47 Classically, a tort in Louisiana comprises art. 2315's four indispensable elements: act, damage, cause, and fault. The Louisiana Supreme Court observed inLanglois v. Allied Chemical Corp. 48 that [f]ault is the key word in art. 2315. 49 In construing fault in art. 2315, Langloisfurther explained, the courts [go] to the many other articles in our Code as well as statutes and other laws which deal with the responsibility of certain persons, the responsibility in certain relationships, and the responsibility which arises due to certain types of activities. 50 In particular, noted the Langlois court, there is sound jurisprudential authority that liability for dangerous and hazardous activities of man flows from Civil Code Article 2315 by analogy with other Civil Code Articles. 51 42 In our review of Louisiana law in Perkins v. F. I. E. Corp., 52 we took cognizance of the Louisiana courts' adherence to the structure established in Langlois, most notably, for purposes of the instant case, the imposition of liability for ultrahazardous activities under art. 2315 by analogy to art. 667. 53 As we also noted in Perkins, however, the Louisiana Supreme Court, in Kent v. Gulf States Utilities Co., 54 later seemed to cast liability for ultrahazardous activities directly upon art. 2315 alone, without relying, either directly or by analogy, on any other codal [sic] article. 55 Referred to as absolute liability, or liability without fault, this concept is perhaps more easily understood when viewed as legal fault or fault supplied by law. Thus, art. 2315's faultelement is imputed, i.e., supplied by law, when designated persons elect to engage in particularly high-risk activities, even though they perform them lawfully, skillfully, and free of negligent or intentional fault in the usual sense. 56 To date, the jurisprudential list of such activities includes only aerial crop dusting, storing hazardous materials, pile driving, and blasting with explosives. 43
44 Within this framework, the Plaintiffs' claims against Kerr-McGee must be analyzed against the backdrop of vicarious tort liability under Louisiana law. A well-established general rule under Louisiana law is that a principal is not liable for the delictual or quasi-delictual offenses (torts) committed by an agent who is an independent contractor in the course of performing its contractual duties. 57 There are, however, two equally well-established exceptions to this rule: A principal may be liable (1) if it maintains operational control over the activity in question, or (2) if, even absent such control, the activity engaged in by the independent contractor is ultrahazardous. 58 Given the Plaintiffs' concession that Kerr-McGee did not retain the requisite operational control over Cardinal, Kerr-McGee could only be held liable in tort for damages caused to the Plaintiffs when Cardinal's wireline perforating gun discharged accidentally if that independent contractor's use of the device constituted an ultrahazardous activity and produced the injury. Thus, the dispositive question here is whether Cardinal's use of the wireline perforation gun in the p&a activity that it was performing for Kerr-McGee, being the activity that inflicted injury on Roberts, was ultrahazardous. 59 45 Under Louisiana law, an activity may be ultrahazardous either as a matter of law or by classification under the test that has been created judicially. Again, activities that have been categorized in Louisiana as ultrahazardous as a matter of law are (1) storage of toxic gas, (2) crop dusting with airplanes, (3) pile driving, and (4) blasting with explosives. 60 As the Louisiana Supreme Court observed in Kent v. Gulf States Utilities, each of these four undertakings is an activity that can cause injury to others, even when conducted with the greatest prudence and care. 61 46 This concept is embodied in the jurisprudential test for ultrahazardous activities that we outlined in Perkins v. F. I. E. Corp. 62 Under the Perkins test, an activity is ultrahazardous if it (1) relates to land or to other immovables; (2) causes the injury, and the defendant was directly engaged in the injury-producing activity; and (3) does not require the substandard conduct of a third party to cause injury. 63 47 The Plaintiffs insist that wireline perforation is a manifestation of blasting with explosives, and should therefore be classified as an ultrahazardous activity as a matter of law. We disagree. In Fontenot v. Magnolia Petroleum Co., 64 the case that decreed blasting with explosives to be an ultrahazardous activity, the Louisiana Supreme Court reversed a judgment in favor of defendants whose geophysical exploration activities on the property of one owner caused damage to the plaintiffs' homes on adjoining land. The geophysical operations involved the intentional detonation of 10-pound charges of Nitramon S at a depth of approximately 70 feet below the surface, and the damage to the plaintiffs' homes (including cracks in walls and ceilings, and broken cement foundations) was alleged to have resulted from the vibrations and concussions radiating in the soil from the point of the explosions conducted by defendants. 65 The Fontenot court observed: 48 It has been universally recognized that when, as here, the defendant, though without fault, is engaged in a lawful business, conducted according to modern and approved methods and with reasonable care, by such activities causes risk or peril to others, the doctrine of absolute liability is clearly applicable. 66 49 Stated differently, even though the blasting may have been conducted responsibly and according to the latest accepted methods, the defendants were nonetheless accountable for any unavoidable damage that flowed from the activity. 50 Subsequently, in Schexnayder v. Bunge Corp., 67 we characterizedFontenot as involving purposeful subterranean explosions in connection with oil exploration, and approved the trial court's jury instruction on ultrahazardous activities, which stated that [a]n ultra-hazardous activity is an activity which [sic], even when conducted with the greatest of care and prudence, could cause a foreseeable harm or damage to those in the neighborhood. 68 Thus, for over a quarter-century we have adhered to the Louisiana Supreme Court's reasoning in Fontenot for classifying the subsurface detonation of explosives as ultrahazardous: Foreseeably, such an activity could cause unavoidable collateral damage to neighbors, even if conducted with due care. 51 Lowering a perforation gun down a well on a wireline and firing it to pierce drill pipe or tubing in an oil and gas well simply does not fit within this rubric. In sharp contrast to the damage incurred by the neighbors in Fontenot, which was inflicted on structures located off the owners' premises by the inevitable, omni-directional underground shock waves produced by the intentional blasting on the owners' premises, the injuries incurred by Roberts were caused by the accidental detonation of the shaped-charge ammunition of the perforation gun, not downhole as intended but at the surface of the owner's premises, i.e., on the Kerr-McGee fixed platform. As we have noted, a perforation gun's shaped charges fire only in the direction toward which their open, conical ends are pointed. When conducted according to modern and approved methods and with reasonable care, 69 a perforating gun is lowered down a well to a predetermined depth, is fired in one or more predetermined directions, produces a force sufficient only to pierce the tubing or casing, and, at most, a matter of but several additional inches of the adjacent formation. The firing of the shaped charges causes virtually no incidental damage to the gun or the wellbore, and no collateral damage whatsoever by way of vibrations, even to the owner's premises, much less to adjoining property, no matter how proximate. 52 In the unfortunate occurrence that injured Roberts, the business end of the shaped charges ---- like the muzzle of a gun ---- happened to be pointed in his direction at a time when the gun was at the surface rather than downhole. His severe injuries were a direct, primary result of the gun's accidental firing, not collateral damage from shock waves or vibrations. And the unintentional firing of the gun was caused by an act of man, presumably the opening of the valve, in turn causing a spike in pressure. We therefore reject the Plaintiffs' contention that the wireline perforation activity during which Roberts was injured is a variety of blasting with explosives and thus ultrahazardous as a matter of law. 53
54 Wireline perforation also fails to meet at least one of the three conjunctive prongs of the broader Perkins test for ultrahazardousness under Louisiana law. The parties agree that wireline perforation of a well in connection with a p&a operation relates to land or to other immovables, and we shall assumearguendo that, through Cardinal, its independent contractor, Kerr-McGee was directly engaged in the wireline perforation activity even though the requisite control over Cardinal had not been retained by Kerr-McGee. 70 Thus, we are concerned here only with the third prong of the Perkins test, whether wireline perforation is an activity that can cause injury to others, even when conducted with the greatest prudence and care. 71 For essentially the same reasons that distinguish the perforation activity from blasting with explosives, we hold that the former is not a manifestation of the latter. 55 First, there is ample evidence in the record to support the contention that wireline perforation, whether employing electrically or pressure-activated firing heads to detonate the shaped charges, can be, and indeed generally is, safely performed thousands of times a year. There is further evidence suggesting that when the (infrequent) accident does occur in connection with wireline perforation, it is directly traceable to human error, either in the initial choice to employ a pressure-activated device in a particular well, or in the failure correctly to follow safety procedures. These features of wireline perforation are similar to the transmission of electricity over power lines which was the challenged activity in Kent. Regarding that activity, the Kentcourt stated that the transmission of electricity over isolated high tension power lines is an everyday occurrence in every parish in this state and can be done without a high degree of risk of injury. 72 The same can be said with equal certainty of wireline perforation of oil and gas wells. We therefore conclude that, unlike the stereotypical ultrahazardous activities recognized by statutes and courts of Louisiana, wireline perforation is likely to cause damage only when there is substandard conduct on someone's part. 73 None can dispute that this declaration is applicable to the sequence of events that transpired in the instant accident; it apparently occurred when someone opened the downhole valve, which increased the pressure, causing the perforation gun to fire while it was at the surface rather than hundreds of feet down the wellbore, as intended. 56 This position is consistent with our prior decisions. InAinsworth v. Shell Offshore, Inc., 74 we concluded that drilling operations do not satisfy the third [element of the Perkins test], holding that such activities were not ultrahazardous. 75 As observed by the district court and reiterated above, wireline perforation is performed frequently in conjunction with both enhancing the flow of oil and gas in a well and plugging and abandoning particular strata or entire wells. This comports with the intermediate appellate court's observation in Bergeron v. Blake Drilling & Workover Co., Inc. 76 that [a] well cannot produce oil or gas unless it is perforated. Thus, perforation is an internal and indispensable element of every well. 77 Wireline perforation is therefore easily classifiable as a drilling operation, and thus not ultrahazardous under Ainsworth. 57 We distinguish our holding today from the Bergeron court's holding which at first blush appears to be to the contrary. InBergeron, a Louisiana court of appeal stated, even if one found that perforating was not ultrahazardous[,] a finding that perforating is a [sic] inherently and intrinsically dangerous work is unavoidable. 78 As the district court in the instant case correctly noted, however, the Bergeron court stopped short of classifying wireline perforation as an ultrahazardous activity, characterizing it instead as inherently dangerous, in the law of Louisiana a distinctly different term of art. Here, the district court continued: 58 By holding Kerr-McGee liable under article 2315 for [an] inherently dangerous activity, this Court would be expanding the Louisiana Supreme Court's policy behind ultrahazardous activity as announced in [Kent]. In Kent, the Louisiana Supreme Court held that the ultrahazardous activity classification was created for the rare instances in which the activity can cause injury to others, even when conducted with the greatest prudence and care. This Court does not find that an inherently dangerous activity fits within the special category of ultrahazardous liability. 79 59 We adopt this reasoning, adding only the observation that the perforating gun in Bergeron had a firing head that was activated by electricity, not by pressure as in the instant case. 80 In contrast to electrical firing of some perforation guns, only the external application of sufficient psi of pressure can detonate a pressure-activated firing head like the one involved in Roberts's injury. Thus, the difference between an activity that is inherently dangerous and one that is ultrahazardous serves to distinguishBergeron from the instant case, and the difference in the risk of accidental discharge between the firing devices involved in the two cases distinguishes them even further. 60 In summary, when we view the operable facts of the instant case in the light most favorable to the Plaintiffs as non-movants, we are satisfied that use of a wireline perforation gun in a p&a operation cannot be held to be an ultrahazardous activity, eitherde jure or de facto. Not only is such perforation factually distinguishable from blasting with explosives, an actuality that would render such perforation an ultrahazardous activity as a matter of law were it not distinguishable; wireline perforation also fails to satisfy the third prong of the Perkins test, which requires the activity to be one that is likely to cause injury to others, even when conducted with the greatest prudence and care. This simply cannot be said of wireline perforation, which is conducted routinely in oilfield drilling, completing, producing, and plugging operations; and in which even the extremely infrequent accident is traceable to substandard human conduct. 61 The imposition of liability on a principal for acts of an independent contractor is permitted only in narrow circumstances. Like the district court before us, we are not willing to increase the range of circumstances when the courts and legislature of Louisiana have not seen fit to do so. Our pronouncement in CNG Producing Co. remains as true today as when it was uttered: We would not subject this activity to strict liability without certain directions from the Louisiana courts 81 to which we would add, or the Legislature.
62 The Plaintiffs do not make altogether clear whether (1) they assert two completely separate and distinct strict liability claims against Kerr-McGee, one for vicarious tort liability under art. 2315, and another for ownership liability under art. 667 82 ; or (2) they assert but one claim, in which they merely seek to analogize art. 667's strict liability for blasting with explosives on the premises with art. 2315's vicarious liability for its independent contractor's wireline perforation with the gun's shaped charges. As the district court made a discrete ruling under art. 667, however, we shall address the Plaintiffs' strict liability charge on the assumption that they asserted such a claim separately under art. 667. When we do so, we discern two distinct reasons why the Plaintiffs cannot recover under art. 667, one substantive and the other jurisdictional. 63 The substantive reason should by now be obvious: The foregoing analysis exhaustively demonstrates why downhole wireline perforation for either completing an oil or gas well or plugging and abandoning one does not equate with blasting with explosives. That applies with equal force when that activity is tested under the exclusive list of but two ultrahazardous activities that are exceptions under art. 667, i.e., blasting with explosives and pile driving. As wireline perforation is not a manifestation of blasting with explosives for tort law purposes in Louisiana, that very same activity cannot logically be ultrahazardous for purposes of art. 667. Therefore, injury resulting from wireline perforation operations on Kerr-McGee's premises cannot subject Kerr-McGee, as proprietor, to liability without fault under art. 667, so the Plaintiffs cannot prevail on their claims under that article. Thus they have failed to state a cause of action under that code article. 64 Second, the Plaintiffs have no right of action under art. 667; jurisdictionally, they do not have standing to sue Kerr-McGee as the proprietor of the platform which is not only Kerr-McGee's estate but is also the same immovable on which Roberts was working when he was injured. Roberts was not on adjacent or adjoining property; neither was he a neighbor deprived of the enjoyment of his own estate. Yet art. 667 clearly requires those elements to be present for a plaintiff to have standing to sue a proprietor for damages caused by even an ultrahazardous activity lawfully conducted on his immovable: The activity on the defendant's premises must damage the neighbor or the neighboring estate. 65 Differing from Louisiana's tort doctrine (which is established in arts. 2315 et seq. in Book III Title V, entitled Obligations Arising Without Agreement), art. 667 appears in Book II, Title IV, entitled Predial Servitudes; specifically, in section 1, Limitations of Ownership, of Chapter 3, Legal Servitudes. The basic term, servitude, is not defined in the Civil Code but is generally understood to be an obligation owed by one estate, referred to as the servient estate, either to designated persons or to another estate, referred to as the dominant estate. There are two kinds of servitudes, personal and predial. 83 A personal servitude is a charge on a thing for the benefit of a person, 84 of which there are but three: usufruct, habitation, and the right of use. 85 In contrast, a predial servitude is a charge on a servient estate for the benefit of a dominant estate, which two estates must belong to different owners. 86 The two immovables that constitute the two estates ---- dominant and servient ---- need not be contiguous or within any given proximity, 87 and the predial servitude itself is an immovable, albeit incorporeal. 88 66 Among predial servitudes are included (1) natural servitudes, such as drainage, (2) legal servitudes, which are those established by law, and (3) conventional servitudes, which are established by contract. Article 667 is applicable to legal servitudes and covers such obligations of neighborhood as keeping buildings in repair, 89 building projections across property lines, 90 building encroachments on adjoining property, 91 common walls, 92 and right of passage to and from an enclosed estate. 93 Article 667 is aptly titled Limitations on use of property. 67 In distinguishing actions under art. 2315 on the one hand and those under arts. 667 and 668 on the other, Professor A. N. Yiannoupoulos has written The question arises, therefore, as to the interrelations of articles 2315, 667, and 668. Specifically, does the broadened notion of fault under article 2315 render the notion of liability without negligence under articles 667 and 668 unnecessary? It is submitted that this is not the case: the two sets of provisions may overlap in part but continue to establish distinct grounds of responsibility. Article 2315 establishes responsibility under the law of delictual obligations for all injuries to persons and property. Articles 667 and 668 establish specifically responsibility for damage to property and persons in the context of neighborhood, namely, under rules of property law. It is conceivable that liability may rest on either ground exclusively or on both cumulatively. Indeed, a plaintiff may satisfy the terms and conditions of both sets of articles and may have two distinct causes of action for a single recovery, one resting on the precepts of the law of obligations and the other on precepts of the law of property; or he may have a cause of action either under article 2315 or under articles 667 and 668. 94 68 Although courts and commentators disagree about the nature of the interest that a plaintiff must have to bring an action under art. 667, all appear to agree that the plaintiff must have someinterest in an immovable near the defendant-proprietor's immovable. For example: 69 E. Who Can Bring the Action? 70 To be a neighbor one need not be an adjoining landowner; as article 651 says[,] it suffices that they [the lands] be sufficiently near, for one to derive benefit from the servitude on the other....Because article 667 appears among those dealing with servitudes, and because article 666 provides that these servitudes are imposed by law upon the proprietors...towards one another, it seems clear that the plaintiff must have a property interest.... 95 71 and, 72 We find that certain persons other than landowners have the requisite interest to entitle them to institute an action based on Article 667.... Because the servitude is established for the benefit of the estate rather than for the owners personally, those who have a proprietary interest in the estate as outlined by Professor Stone have the standing to bring an action under Article 667. 96 73 and, again, 74 We are of the further opinion that the word neighbor as used in Article 667 is indefinite and refers to any land owner whose property may be damaged irrespective of the distance his property may be from that of the proprietor whose work caused the damage. 97 75 To summarize this point, art. 667 authorizes an action by a neighbor against the owner of an immovable (proprietor) for damage that the neighbor suffered by virtue of an activity conducted on the proprietor's premises. To show that he is a neighbor, and thus legally entitled (standing; right of action) to maintain an art. 667 action, a plaintiff must show some type of ownership interest in immovable property near that of the proprietor. 76 In completing this analysis, we note that, in 1977, Louisiana's legislature amended portions of the Civil Code pertinent to this analysis. Prior to the amendment, art. 666 provided that legal servitudes (including art. 667) were imposed by law upon the proprietors...towards one another. Following the amendment, arts. 664 and 666 were condensed to form the new art. 659, 98 which states: Legal servitudes are limitations on ownership established by law for the benefit of the general public or for the benefit of particular persons. This amendment on its face makes it less clear that one must have some type of immovable property interest to maintain an action under art. 667; the official revision Comment provides, however, that new art. 659 is based on art. 664 of the Louisiana Civil Code of 1870, and does not change the law. 77 Nevertheless, to confirm our conclusion that there has been no change in interpretation, i.e., that the revisions did not strip away the requirement that a plaintiff have some type of immovable property interest, we turn to post-amendment court and commentator treatments of art. 667. Our review of these serves to satisfy us that there has been no such change. Professor Yiannopoulos still writes: 78 Literally, Articles 667 and 668 apply to proprietors, namely, landowners....By virtue of an expansive interpretation, any person assuming the position of owner, usufructuary, possessor in good or bad faith, or long term lessee, may qualify as a proprietor....Persons that do not qualify as proprietors, such as guests, contractors, and members of the public, may have a variety of remedies against a landowner under the law of delictual obligations or under Article 669, but not for violation of obligations established by Articles 667 and 668. 99 79 And the courts of Louisiana continue to agree. 100 80 In summary, then, the Plaintiffs are precluded both procedurally and substantively from recovering against Kerr-McGee under art. 667. Procedurally, they have no standing or right of action to sue Kerr-McGee under art. 667 as owner of the platform, an immovable that is the servient estate in this instance, because art. 667 creates obligations in favor of proprietors who are neighbors and thus enjoy the position of the dominant estate of the predial servitude of neighborliness created by this section of the Civil Code. Roberts, a non-proprietor, incurred his injuries while he was physically present on the servient estate, not on a dominant one; and his injuries resulted from the proprietor's lawful use of his estate. Conversely, none of the Plaintiffs is owed a duty by virtue of ownership or presence on an adjacent or proximate dominant estate, and therefore they cannot ground their claims against Kerr-McGee in any aspect of predial servitudes in general or art. 667 in particular. 81 Substantively, the Plaintiffs are precluded from recovery under art. 667. First, they have not attempted to demonstrate ---- nor could they ---- that Kerr-McGee knew or, in the exercise of reasonable care, should have known that [its] works would cause damage, that the damage could have been prevented by the exercise of reasonable care, and that [it] failed to exercise such reasonable care. Second, absent knowledge and ability to prevent, Kerr-McGee could only be answerable for damages if the injuries were caused by ultrahazardous activity which, for purposes of art. 667, is strictly limited to pile driving or blasting with explosives. 101 And, as the district court correctly determined, use of a wireline perforating gun in the course of plugging and abandoning an oil or gas well is not a manifestation of blasting with explosives.