Court Opinion

ID: 32143
Source: CourtListenerOpinion
Date Created: 2010-04-25 18:50:13+00
Date Added: 2024-06-11T16:47:26.205873
License: Public Domain

United States Court of Appeals
                                                                     Fifth Circuit
                                                                    F I L E D
                         Revised July 31, 2003
                                                                     July 23, 2003
                    UNITED STATES COURT OF APPEALS
                         FOR THE FIFTH CIRCUIT                  Charles R. Fulbruge III
                                                                        Clerk

                                02-30659

CARL FRUGE, on behalf of Casey Fruge; DARLA MONK FRUGE, on behalf
                  of Casey Fruge; DERRICK FRUGE

                                                  Plaintiffs-Appellants,

                                    VERSUS

                    PARKER DRILLING COMPANY, ET AL

                                                                Defendants,

      ANADARKO PETROLEUM CORPORATION; STOKES & SPIEHLER USA
            INCORPORATED; GREG ZIELINSKI INCORPORATED,

                                                   Defendants-Appellees.

           Appeal from the United States District Court
               For the Western District of Louisiana

Before DUHÉ, EMILIO M. GARZA and DeMOSS, Circuit Judges.

DUHÉ, Circuit Judge:

     In   this   suit   involving    personal   injuries   on   a   drilling

platform on the outer continental shelf off the coast of Louisiana,

the district court granted summary judgment to the platform owner

and two independent contractors whom the owner had hired to monitor

the drilling operation.     Holding as a matter of law that Appellees

are not subject to strict liability, are not guilty of negligence,
nor responsible for the negligent acts, if any, of the drilling

contractor (another independent contractor not appearing in this

appeal), or for loss of evidence, we affirm.

                                        I.

     Defendant-Appellee Anadarko Petroleum Corporation (“Anadarko”)

as principal contracted with Parker Drilling Offshore Corporation

(“Parker”) as drilling contractor to complete a well on Anadarko’s

stationary platform.       Plaintiff’s employer, M-I, LLC, was under

contract with Anadarko to provide filtration services for the

project.      Plaintiff-Appellant Carl Fruge was operating a filter

unit on the platform when a discharge hose which was part of

Parker’s rig ruptured and injured him.

     The ruptured hose was not produced for examination despite

Plaintiff’s demands.       The hose is lost.           The on-site supervisors

saw the ruptured hose at the time of the accident and several times

after   the    accident.      Those      supervisors      were   employees    of

Defendants-Appellees       Stokes   &       Spiehler    USA,   Inc.,   and   Greg

Zielinski, Inc., with whom Anadarko had contracted to provide

company men for on-the-job supervision.

     Fruge sued Parker, Anadarko, Stokes & Spiehler, and Zielinski,

among others. Anadarko, Stokes & Spiehler, and Zielinski moved for

summary judgment on the basis that they were not negligent and did

not exercise operational control over Parker’s drilling operations

so bore no responsibility for Parker’s alleged negligence.

     The district court granted all three motions.               Fruge's claims

                                        2
against Parker remain in the district court.1

       This   Court    reviews   grants     of   summary   judgment   de novo,

applying the same standard as the district court, viewing the

evidence in a light most favorable to the non-movant.             Coulter v.

Texaco, 117 F.3d 909, 911 (5th Cir. 1997); Coleman v. Houston

Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir. 1997).

                                      II.

       Federal jurisdiction is predicated on the Outer Continental

Shelf Lands Act (OCSLA), 43 U.S.C. § 1331 et seq.            OCSLA adopts the

law of the adjacent state (Louisiana) as surrogate federal law, to

the extent that it is not inconsistent with other federal laws and

regulations.     Bartholomew v. CNG Producing Co., 832 F.2d 326, 328

(5th   Cir.   1987);    43   U.S.C.   §    1333(a)(2)(A).      Thus   the   law

applicable is “federal law, supplemented by state law of the

adjacent state.”       Rodrigue v. Aetna Cas. & Sur. Co., 395 U.S. 352,

355, 89 S. Ct. 1835, 1837, 23 L. Ed. 2d 360 (1969).

       Bearing in mind these principles, we are first asked to

determine whether federal regulations create civil liability beyond

the liability under state law as enunciated in Coulter v. Texaco.

Applying Louisiana negligence law, Coulter held that a principal is

not liable for the actions of its independent contractor unless the

  1
      Appellate jurisdiction is appropriate, as Fruge noticed
appeals from judgments certified as final under Fed. R. Civ. P.
54(b). We agree with the parties that the timeliness of the appeal
under 28 U.S.C. § 1292(a)(3) is not at issue, because this case
does not arise under admiralty jurisdiction.

                                       3
principal retained “operational control” over the contractor’s work

(discussed infra) or expressly or impliedly approved its unsafe

work practice that led to an injury.        Coulter, 117 F.3d at 912.

      Fruge argues that Coulter is not an appropriate precedent

because it did not deal with federal Minerals Management Service

("MMS") regulations enacted after Coulter.            Those regulations,

according to Plaintiff, place primary responsibility on the mineral

lessee (Anadarko) and its agents (Zielinski and Stokes & Spiehler)

for supervising the operations and maintaining safety over the

operations and equipment — without any regard to “operational

control” or authorization of an unsafe work practice.         If a mineral

lessee establishes that it did not maintain operational control,

according   to   Fruge,   it   has   necessarily   violated   the   federal

regulations, creating liability as a matter of law.                 The key

regulation, in Plaintiff’s view, charges that the lessee, the

operator, and the person actually performing the activity “are

jointly and severally responsible” for complying with the offshore

MMS regulations.      30 C.F.R. § 250.146(a)&(c).        This regulation

further allows the Regional Supervisor to require any or all co-

lessees to fulfill obligations under the regulations or the lease,

if the designated operator fails to fulfill obligations under the

regulations.     Id. § 146(b).2

  2
     The regulation provides as follows:
   § 250.146 Who is responsible for fulfilling leasehold
obligations?
     (a) When you are not the sole lessee, you and your

                                      4
      The MMS regulations in place at the time of Coulter similarly

carried the concept of responsibility on the parts of both the

lessee and the operator for obligations under the lease and the

regulations.3    The   Secretary   has   considered   the   law   to   have

provided for joint and several liability of co-lessees and the

operator since the enactment of OCSLA (1953) and the common law,

   co-lessee(s) are jointly and severally responsible for
   fulfilling your obligations under the provisions of 30 CFR
   parts 250 through 282, unless otherwise provided in these
   regulations.
      (b) If your designated operator fails to fulfill any of
   your obligations under 30 CFR parts 250 through 282, the
   Regional Supervisor may require you or any or all of your
   co-lessees to fulfill those obligations or other operational
   obligations under the [OCSLA], the lease, or the regulations.
      (c) Whenever the regulations in 30 CFR parts 250 through
   282 require the lessee to meet a requirement or perform an
   action, the lessee, operator (if one has been designated), and
   the person actually performing the activity to which the
   requirement applies are jointly and severally responsible for
   complying with the regulation.
30 C.F.R. § 250.146 (2002)(eff. Jan. 27, 2000, 64 Fed. Reg. 72,756
(Dec. 28. 1999)).
  3
      July 29, 1997, was the decision date of Coulter. The MMS
regulations at that time provided,
   § 250.8 Designation of operator.
   In all cases where operations are not conducted by an
   exclusive owner of record, a designation of operator shall be
   submitted to the Regional Supervisor prior to the commencement
   of operations. This designation will be accepted as authority
   for the operator, or the operator's local representative, to
   act on behalf of the lessee and to fulfill the lessee's
   obligations under the Act and the regulations in this part. .
   . .    In case of a termination [of the authority of the
   operator] or in the event of a controversy between the lessee
   and the designated operator, both the lessee and the operator
   will be required to protect the interests of the lessor.
30 C.F.R. § 250.8 (1988)(emphasis added). This regulation became
effective May 31, 1988, 53 Fed. Reg. 10,596 (April 1, 1988), and
was superseded August 20, 1997, by § 250.8, infra n.4.

                                   5
through   the   present   date.4       Although   the   regulations

  4
      The MMS has taken the position, since long before the 1988
regulation quoted in the previous note, that the both lessee and
the designated operator are required to bear the non-monetary
obligations under the lease as well as any obligations under the
regulations.     Publishing notice of the superseding regulation
(reproduced below) which used the phrase “joint and several” to
describe non-monetary lease obligations, the MMS expressed its
intention that the regulation simply “[c]larifie[d] [its] position
that co-lessees and operating rights owners are jointly and
severally liable for compliance with our regulations and the terms
and conditions of their OCS oil and gas and sulphur lease for
nonmonetary obligations.” 62 Fed. Reg. 27,948, 27,948-49 (May 22,
1997) (emphasis added). That “clarifying” regulation provided,
   § 250.8 Designation of operator.
   This section explains the requirement for designation of an
   operator to conduct operations on a lease where the operator
   is not the sole lessee (record title owner) and owner of
   operating rights.
   (a) Each record title owner (lessee) or operating rights owner
   for a lease must provide the Regional Supervisor a designation
   of operator in each case where someone other than an exclusive
   record title and operating rights owner will conduct lease
   operations. . . .
   (1)     This designation of operator is authority for the
         operator to act on behalf of each lessee and operating
         rights owner and to fulfill each of their obligations
         under the Act, the lease, and the regulations in this
         part.
         . . .
      (3) If you terminate a designation of operator or a
         controversy develops between you and your designated
         operator, you and the operator must protect the lessor's
         interests.
         . . .
      (b) Lessees and operating rights owners are jointly and
      severally responsible for performing nonmonetary lease
      obligations, unless otherwise provided in the regulations in
      this chapter. If the designated operator fails to perform any
      obligation under the lease or the regulations in this chapter,
      the Regional Director may require any or all of the co-lessees
      and operating rights owners to bring the lease into
      compliance.
30 C.F.R. § 250.8 (1997)(emphasis added)(effective Aug. 20, 1997,
62 Fed. Reg. 27,954 (May 22, 1997), redesignated as 30 C.F.R. §
250.108 effective June 30, 1998, without any change in substance,

                                   6
63 Fed. Reg. 29,478, 29,479 (May 29, 1998)(renumbering §§ 250.0-
250.26 as §§ 250.100-250.126), and superseded Jan. 27, 2002 by 30
C.F.R. § 250.146 (2002), supra n.2). Further revealing the MMS’s
understanding that joint and several liability had been the law
since before Coulter, the Federal Register reported the following
comment and response relative to proposed § 250.8(a)(1):
      Comment: A trade organization commented that the imposition
   of joint and several liability should be prospective only
   because the Secretary has no authority to issue retroactive
   rules.
      Response: This rule merely codifies what has been the law
   under the OCSLA, since enactment and the common law. As
   previously noted, section 5(a)(2)(C)(II) of the OCSLA
   describes those who jointly own interests in a lease as
   "partners."
62 Fed. Reg. 27,948, 27,950 (May 22, 1997)(emphasis added).
Announcing the regulation as final, the MMS again demonstrated that
it had long held the view that operating rights owners and lessees
are jointly and severally responsible for nonmonetary lease
obligations as well as obligations to comply with MMS regulations
in the following commentary:
      Section 250.8 . . . Since joint and several liability is
   closely related to the requirement for the designation of an
   operator, we have consolidated several provisions of the
   proposed rule in a revised §250.8 . . . . Every lessee or
   working interest owner who executes the designation of
   operator required under the provisions of § 250.8, Form
   MMS-1123, acknowledges its joint and several liability.
      Comment: Twelve respondents expressed opposition to, or
   lack of support for, what they characterized as "the effort to
   establish joint and several liability between co-lessees or
   between assignors and assignees of OCS leases."
      Response: This rule simply clarifies our position that
   nonmonetary lease obligations are joint and several among
   co-lessees (i.e., multiple lessees) and owners of operating
   rights. Section 5(a)(2)(C)(II) of the Outer Continental Shelf
   Lands Act (OCSLA) equates multiple lessees to "partners."
      Our position on this matter remains the same as it was May
   10, 1954, the effective date of the regulations the Department
   of the Interior (DOI) issued to implement the OCSLA of 1953.
   . . .
      As previously noted, each party that executes a designation
   of operator agreement recognizes the joint and several nature
   of OCS lease obligations. The designation of operator (Form
   MMS-1123) designates the entity that the co-lessees authorize
   to conduct lease operations as each of the co-lessee's

                                7
have   been   modified   a   number   of   times,   the   regulations   and

commentary manifest the intention to retain this shared liability

over the years.   Nothing in the 2002 regulations preempts Coulter,

and Coulter is therefore still precedent.

       Additionally, this Court has held that a violation of the MMS

regulations does not give rise to a private cause of action.

Romero v. Mobil Exploration & Producing North America, Inc., 939
F.2d 307, 310-11 (5th Cir. 1991).           The regulations govern the

parties’ joint and several liabilities vis-à-vis the Government,5

not amongst themselves.6        This principle also defeats Fruge’s

   "operator and local agent." Each lessee, by execution of the
   designation of operator, agrees that "In case of default on
   the part of the designated operator, the signatory lessee will
   make full and prompt compliance with all regulations, lease
   terms, or orders of the Secretary of the Interior (Secretary)
   or his representative."
Id. at 27,949 (emphasis added).
  5
     See, e.g., 62 Fed. Reg. 27,948, 27,950 (discussing 30 C.F.R.
§ 250.8(a)(1)(eff. Aug. 20, 1997), supra n.4) in which the MMS
declared, “While parties to a contract may agree to limit
liability, neither Congress nor the Secretary ever agreed to limit
the liabilities of OCS lessees for operational obligations.”
  6
        Fruge also argues that the regulations making the duties
joint and several perforce make the duties non-delegable among the
private parties.    Discussing joint and several liability of §
250.108, the MMS responded to a comment on a related regulation
making lessees and owners of operating rights jointly and severally
responsible for obligations relating to abandoning well bores (30
C.F.R. § 250.110). In the following exchange, the MMS made clear
that the joint and several liability to the MMS for fulfillment of
lease obligations does not prevent the parties from parsing out the
obligations differently among themselves by contract:
      Section  250.110   General   requirements.   Comment:   Two
   respondents recommended that paragraph (b) of §250.110,
   General requirements, be changed to clarify the extent of
   responsibility of prior lessees for obtaining compliance with

                                      8
contention that Anadarko had a duty under the regulations to use

the best available and safest technology to test the hose.             Under

the drilling contract, the obligation to maintain and repair

Parker’s equipment and to comply with applicable safety regulations

rested on Parker’s shoulders.7    The OCSLA regulations do not create

an independent duty under Louisiana negligence law.               Dupre v.

Chevron   U.S.A.,   Inc.,   109 F.3d 230,   231   (5th   Cir.    1997).

Therefore, we will follow the guidance of Coulter and Romero,

finding   nothing   in   the   MMS       regulations    to   preempt   their

application.

                                  III.

      Fruge next argues that, regardless of the MMS regulations,

under the Coulter standard, the evidence left a question of fact

   accrued obligations.
      Response: We have modified the text of this provision to
   present its contents in easily understood English. While this
   rule determines who is liable to MMS for performance of
   nonmonetary obligations, it is not our intention that this
   rule preclude private agreements concerning the allocation of
   liabilities between and among the affected parties. Nor does
   this rule specify against whom we will take enforcement action
   if we discover noncompliance.
62 Fed. Reg. 27,948, 27,949-50 (emphasis added). The Secretary
further declared, “MMS has never given its imprimatur to efforts of
lessees to limit their liabilities to MMS, much less created a
property right to such limitations.”       Id. at 27,950 (emphasis
added).
  7
     Master Domestic Daywork Drilling Contract § 503(b) (Parker and
its personnel to "comply with all applicable federal, state, and
local laws, ordinances, rules, regulations, and lease or contract
provisions regarding pollution, safety and the environment"); id.
§ 403 (Parker “responsible for the maintenance and repair” of all
its own equipment).

                                     9
whether    Anadarko    and     its    company     representatives      retained

operational control over the work of its independent contractor,

Parker. To determine whether the exception for operational control

makes a principal liable, we first examine the extent to which

Anadarko contractually reserved the right to control the work.

Coulter, 117 F.3d at 912.

     Under the contract between Parker and Anadarko, Parker was

"responsible   for    the    maintenance    and   repair   of   all    [its   own

equipment].”    Master Domestic Daywork Drilling Contract § 403.

Parker also was responsible for the “operation and control of the

Drilling Unit,” including supervision and having “final authority

and responsibility for the safety and operation of all systems and

all personnel associated with the drilling operation.”                Contract §

502(a).    When the contract assigns the independent contractor

responsibility for its own activities, the principal does not

retain operational control.          See Coulter, 117 F.3d at 912.

      Operational control exists only if the principal has direct

supervision over the step-by-step process of accomplishing the work

such that the contractor is not entirely free to do the work in his

own way.    LeJeune v. Shell Oil Co., 950 F.2d 267-270 (5th Cir.

1992); McCormack v. Noble Drilling Corp., 608 F.2d 169, 175 n.9

(5th Cir. 1979).       Here, Parker was exclusively responsible for

controlling the details of the work it performed: the contract

provided that Parker “shall be an independent contractor with

respect to performance of all work hereunder.              [Anadarko] shall

                                       10
have no direction or control of [Parker] or [Parker's] Personnel

except in the results to be obtained."        Contract § 105 (emphasis

added).

       The summary judgment evidence shows Anadarko provided on-site

supervision 24-hours per day, via various independent contractors

whose employees reported to Anadarko staff engineers on a daily

basis. The physical presence of a representative of a principal is

not sufficient to show supervision or control.          Ainsworth v. Shell

Offshore, Inc., 829 F.2d 548, 550-51 (5th Cir. 1987), cert. denied,

485 U.S. 1034, 108 S. Ct. 1593, 99 L. Ed. 2d 908 (1988); Graham v.

Amoco Oil     Co., 21 F.3d 643, 646 (5th Cir. 1994).               Periodic

inspections by a principal's "company man" do not equate to that

principal retaining control over the operations conducted by a

drilling crew.    Ainsworth, 828 F.2d at 550.       “In short, absent an

express or implied order to the contractor to engage in an unsafe

work practice leading to an injury, a principal . . . cannot be

liable under the operational control exception." Coulter, 117 F.3d

at 912.

       Summary judgment is appropriate because Plaintiff has failed

to present facts sufficient to distinguish his case from Coulter.

See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct.
2548, 91 L. Ed. 2d 265 (1986) (summary judgment is appropriate unless

plaintiff can present evidence to support each essential element of

his claim).     “This Court has consistently held on similar facts

that   a   principal,   such   as   [Anadarko],   who   hires   independent

                                     11
contractors over which he exercises no operational control has no

duty to discover and remedy hazards created by its independent

contractors.” Wallace v. Oceaneering Int’l, 727 F.2d 427, 437 (5th

Cir. 1984).    On the evidence of record, summary judgment is proper

for Anadarko as well as the employers of Anadarko’s company men,

Zielinski and Stokes & Spiehler, neither of whom are responsible

for the alleged negligent acts of an independent contractor of

their principal.

                                        IV.

      As   alternative      grounds    for       liability,   Fruge    argues    that

Anadarko or its representatives had custody of the defective hose

that caused Fruge's injuries or that the hose was a component part

or appurtenance to Anadarko’s platform, resulting in custodian or

premises liability under the Louisiana Civil Code.                    Indisputably,

Parker     provided   the    hose     and    Parker    employees      operated    its

equipment.

      The first requirement for custodial liability under Louisiana

Code articles 2317 and 2317.1,8 is that the "thing" that caused the

injury be in the custody of the defendant.                Although the owner is

  8
     Louisiana Civil Code article 2317 provides, “We are
responsible, not only for the damage occasioned by our own act, but
for that which is caused by . . . the things which we have in our
custody.” Article 2317.1 provides, “The owner or custodian of a
thing is answerable for damage occasioned by its ruin, vice, or
defect, only upon a showing that he knew or, in the exercise of
reasonable care, should have known of the ruin, vice, or defect
which caused the damage,” if the damage could have been prevented
by the exercise of reasonable care.

                                            12
presumed to have custody, a non-owner defendant may have custody

over property if “he exercises direction and control of the thing

and derives some benefit from it.”        Coulter, 117 F.3d at 913 &

n. 10. The mere presence of Anadarko's company man does not create

the kind of supervision and control necessary to establish that

Anadarko had custody over the Parker rig or the hose that ruptured.

Neither the presence of company men who monitored the contractor’s

performance   nor   the   limited   involvement   of   engineers   “comes

anywhere close to creating the kind of supervision and control

necessary” to establish the principal’s custody over the drilling

rig or the hose for purposes of article 2317.      Coulter, 117 F.3d at

914.

       As for premises liability under article 2322,9 a prerequisite

to recovery is that Parker’s rig "had become an appurtenance to, or

integral part of, [Anadarko’s] platform by virtue of that rig’s

physical attachment to that structure."     Coulter, 117 F.3d at 914.

Things are considered a component part of a construction for

purposes of assessing premises liability under article 2322 if they

are “permanently attached” to a building or other construction

within the meaning of article 466.         Coulter, 117 F.3d at 914.

  9
        Louisiana Civil Code article 2322 makes the owner of a
building “answerable for the damage occasioned by its ruin, when
this is caused by neglect to repair it, or when it is the result of
a vice or defect in its original construction,” if he knew or
should have known of the vice or defect which caused the damage,
and the damage could have been prevented by the exercise of
reasonable care.

                                    13
“Things are considered permanently attached if they cannot be

removed    without   substantial    damage    to   themselves    or   to   the

immovable to which they are attached.”         La. Civ. Code art. 466.

      Plaintiff has pointed out no evidence that Parker's rig became

a component part of Anadarko's platform. The only summary judgment

evidence is to the contrary — that the rig moved from platform to

platform without substantial damage to either the rig or the

platform.    As such, we hold as a matter of law that the rig is not

an appurtenance for purposes of article 2322.            See Coulter, 117
F.3d at 914-918.

        Fruge's theories of recovery under articles 2317, 2317.1, and

2322 therefore fail.

                                    V.

      Fruge finally argues that according to the two cases decided

at Marocco v. General Motors Corp., 966 F.2d 220 (7th Cir. 1992),

Anadarko should be held liable as a matter of law for loss of the

hose.     Those two cases are distinguishable in that each involved

violation of a protective order.          See id. at 221.

      Here, the hose was lost before the suit was filed, when no

such order to preserve evidence had issued.           Moreover, Plaintiff

presented no evidence suggesting bad faith on the part of Anadarko.

Accordingly, we discern no error in the district court’s decision

to   dismiss   Anadarko   despite    Plaintiff’s     arguments    regarding

spoliation of evidence.

                                    VI.

                                    14
      After a de novo review of the record, we hold that the

undisputed facts leave no room for finding liability against

Anadarko,   Stokes     &    Speihler,   or   Zeilinski   under    the   various

theories asserted. Under the Anadarko/Parker contract and based on

the   conduct     of       the   parties,    Anadarko    and     its    company

representatives did not have operational control over the work

performed by Parker.         A violation of MMS regulations, even if one

occurred, does not give rise to a cause of action.               The hose that

ruptured was not in the custody of Anadarko or its representatives,

at the time of the accident and the rig was not part of Anadarko’s

platform.    We find no error in the decision not to sanction

Anadarko for the loss of the hose.           The judgment of the district

court is

      AFFIRMED.

                                        15