Court Opinion

ID: 4815
Source: CourtListenerOpinion
Date Created: 2010-04-25 04:59:30+00
Date Added: 2024-06-11T13:29:43.551534
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                             FOR THE FIFTH CIRCUIT

                                ---------------
                                  No. 91-3022
                                ---------------

JAY OLAN WILSON,                                           Plaintiff,

                                     versus

JOB, INC., ET AL.,                                         Defendants.

                                ***************

FUGRO MCCLELLAND MARINE GEOSCIENCES, INC.,                 Defendant-Appellant,

                                     versus

EDISON CHOUEST OFFSHORE,                                   Defendant-Appellee.

                                ***************

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           Appeal from the United States District Court
               for the Eastern District of Louisiana

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Before POLITZ. Chief Judge, BROWN AND SMITH, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

     In    a    battle   between    vessel   owner   and    time    charterer   to

determine the appropriate share of the plaintiff's settlement to be

borne by each of them, the district court entered summary judgment

and later a final judgment in favor of vessel owner and against

charterer because plaintiff's injuries were found to have been

caused during an activity "arising out of charterer's actual

drilling       operations"    and   thus,     according     to     the   charter's

reciprocal indemnity agreement, charterer was held liable and was,
therefore, unable to recover from the P & I policy in which it was

expressly an additional assured.            Charterer appealed the denial of

its motion for summary judgment maintaining that plaintiff was

engaged in the "operation of the vessel" when he was injured.1                It

also appealed from the grant of summary judgment in favor of owner

against the charterer.        Finding no error, we affirm in favor of

owner.

                                   The Injury

      This litigation arises out of an injury sustained by plaintiff

Jay Wilson (Wilson) on October 9, 1989, while he was working aboard

the R/V R.L. PERKINS (vessel).              The vessel was owned by Edison

Chouest Offshore, Inc. (Chouest), and on the date of Wilson's

accident,    was   under    time   charter     to   Fugro-McClelland     Marine

Geoscience, Inc. (McClelland).         The vessel was working pursuant to

a written charter party which had been in effect between Chouest

and McClelland since 1978.

      McClelland chartered the vessel to act as a movable base from

which it would conduct studies of the ocean floor.2              Wilson was an

      1
            The denial of a Rule 56 motion is an interlocutory order from which
no appeal is available until the entry of judgment. Since the district court
followed the denial of Charterer's motion for summary judgment with a Final Order
dismissing Charterer's cross-claim, Charterer has the right to argue on appeal
that the district court erroneously denied its Rule 56 motion. 10 C. Wright, A.
Miller & M. Kane, Federal Practice and Procedure: Civil 2d § 2715 at 636, 638
(1983).
      2
            McClelland is in the business of extracting and analyzing core
samples taken from the seabed. In addition, McClelland's business entails
preparing topographical surveys of the ocean floor. These core samples and
topographical surveys are used by oil companies to determine if a drilling rig or
a fixed platform can be anchored at a given location. McClelland obtains core
samples by using a drilling rig, which has a small derrick and drawwork. The
rig, along with equipment necessary to analyze the core samples and topographic
equipment designed to survey the ocean floor, are normally placed semi-
permanently on the stern deck of an offshore vessel. McClelland followed this
normal procedure during its use of the R/V R.L. PERKINS.

                                        2
employee of JOB Labor Contractors, Inc. (JOB), a company which

occasionally provided contract labor to McClelland.

      Wilson's accident occurred halfway through his twelve hour

shift     at   0630    hours   while   he    was   working    atop   an   elevated

McClelland equipment shack or "doghouse" located on the stern deck

of the vessel.        This shack was part of the McClelland core sampling

equipment placed aboard the vessel by McClelland.               In the course of

McClelland's      drilling      activities,        their     drilling     equipment

habitually became muddy, and Wilson, just as he had done "every

time we finished a hole," was rinsing off the equipment.                   In fact,

Wilson had been instructed by Darryl Lindquist, a McClelland

employee, that "everything on the back deck had to be cleaned, it

all had to be rinsed down, just in case big shots from the office

showed up."3     Wilson had never before been on top of the doghouse,

but on this occasion Lindquist "told [Wilson] specifically to get

up on top of the doghouse and rinse it down."                  Wilson washed the

doghouse with a high pressure wash wand, similar to the sort used

at a car wash, that was hooked up to a compressor and an airtank.4

Wilson climbed on a hundred-gallon water tank to reach the top of

the doghouse and, once on top of it, he began washing the doghouse

platform while holding the wash wand in one hand.               He described the

weather as "pretty rough, windy.             I would say seven-foot seas."       He

approximated the winds to be at 30 to 40 miles per hour and stated

      3
            At the time of the accident, the vessel was going back to the dock
to get chemicals and mud to go back out on another McClelland job.
      4
            Wilson was familiar with the force of the pressure washer as he had
been using it for "a couple of hours" prior to his accident.

                                         3
that the boat was constantly rolling from side to side.     Wilson

finished cleaning the doghouse platform and then, from his perch on

the platform, he began to clean an adjoining McClelland mud tank

two to three feet away.   As he squatted or bent down to reach the

sides of the mud tank with the wash wand, with only his toes in

contact with the doghouse platform floor, the boat rolled to one

side causing the plaintiff to lose his balance.    Wilson tried to

direct his fall to an "opening spot" by grabbing on to the mudtank

for balance.   He failed to keep his grip and fell approximately

seven feet from the doghouse platform, down the side of the

mudtank, on to some circulation pipes injuring his leg.

                  Navigating Chartered Territory

     The charter party between McClelland and Chouest anticipated

such an accident and addressed fixation of any resulting liability.

Two relevant portions of the charter party form the basis of this

particular dispute.   By the "OWNER'S HOLD HARMLESS" provision,

found at paragraph 18 of the charter, Chouest agreed

     to indemnify and hold harmless CHARTERER [McClelland]
     from and against all suits, claims, actions, demands,
     fines, penalties, and forfeitures . . . arising from or
     incurred as a result of the manning, navigating,
     operating, maintaining, victualing, supplying, and
     managing of the vessel....

     McClelland, in the reciprocal "CHARTERER'S HOLD HARMLESS"

provision, paragraph 19, correspondingly agreed

     to hold harmless and indemnify OWNER [Chouest] from and
     against any suits, claims, actions, and demands arising
     directly   out    of   CHARTERER's    actual   drilling

                                 4
      operations....5

Each party claims that the other is bound under the terms of their

respective "hold harmless" obligations.             The question before us,

then, comes down to this:          Did Wilson's injury arise from "the

manning, navigating, operating, maintaining, victualing, supplying,

[or] managing of the vessel," or did his injury arise "directly out

of   [McClelland's]     actual    drilling    operations."        Our   answer,

however, does not turn on whether Wilson was a seaman.              Therefore,

despite McClelland's proffer, we decline to determine Wilson's

seaman status.6

      Likewise, the district court found          Wilson's seaman status to

be an irrelevant issue.          In its order denying McClelland's and

granting Chouest's motion for summary judgment, the district court,

instead, considered the relevant portions of the charter and

determined that "[t]he drilling and other equipment associated with

the coring was owned and operated by McClelland, and the obligation

of the Chouest crew did not extend to the operation of the

      5
            Likewise, the charter party obligates each party to acquire
insurance and to designate the other as an additional assured. Referring to the
various insurance that Chouest was obligated to obtain, paragraph 13 (E) states:
"All policies shall name CHARTERER, OWNER, and any additional parties designated
by CHARTERER or OWNER, as coassureds." Similarly, Paragraph 19 provides:
"CHARTERER'S Comprehensive General Liability Insurance shall name OWNER, and its
affiliated or subsidiary companies as additional assureds[.]"
      6
             Indeed, an employee of a contractor doing the ship's work could be a
seaman; however, the relative liability of the charterer or the owner, the real
issue here, will be determined not by the plaintiff's seaman status, but by the
charter party which spells out the responsibilities of the charter parties. As a
charter agreement for a vessel, the McClelland-Chouest charter is a maritime
contract and the reciprocal indemnity clauses which it contains are to be
construed according to maritime law. Lirette v. Popich Bros. Water Transport,
Inc., 699 F.2d 725, 728 n. 11 (5th Cir. 1983); Transcontinental Gas Pipe Line
Corp., v. Mobile Drilling Barge, 424 F.2d 684, 691 (5th Cir.), cert. denied sub
nom. Ocean Drilling & Exploration Co. v. Signal Oil & Gas Co., 400 U.S. 832, 91
S.Ct. 65, 27 L.Ed.2d 64 (1970).

                                        5
McClelland    equipment."        Rejecting    McClelland's     argument     that

Chouest was obligated to indemnify McClelland because Wilson's

injury arose out of the operation of the vessel, the district

court, instead, held in favor of Chouest, the owner:

           Article 19 of the Time Charter provides that the
      Charterer [McClelland] will hold harmless and indemnify
      the Owner [Chouest] 'against any suits, claims, actions,
      and demands arising directly out of the Charterer's
      actual drilling operations . . . .' Although drilling
      was not taking place at the time of the accident, the
      word 'actual' is not to be interpreted in its restrictive
      sense, but it is broad enough to encompass the
      plaintiff's activities at that time. Moreover, plaintiff
      was not engaged in the operation of the vessel; rather,
      he was engaged in the special activities of the vessel,
      core sampling. Since plaintiff's alleged injuries really
      arise out of McClelland's core sampling activities, the
      onus of providing insurance and indemnification properly
      falls on McClelland.

Minute entry of October 24, 1990 at p. 2.

      In reviewing the district court's grant of summary judgment in

favor of Chouest and its denial of McClelland's motion for summary

judgment, we review all issues de novo, applying the same test as

the district court.       LeJeune v. Shell Oil Co., 950 F.2d 267, 268

(5th Cir. 1992).        Summary judgment is proper if "there is no

genuine issue as to any material fact and the moving party is

entitled to judgment as a matter of law."            F.R.Civ.P. 56(c).7

      7
            In appealing from the district court's final judgment, McClelland
appeals both the district court's granting of Chouest's motion for summary
judgment and the court's denial of McClelland's own motion for summary judgment.
      The procedural history of McClelland's appeal is as follows: After Wilson
initiated suits against JOB, McClelland, Chouest and their respective liability
carriers as direct party defendants, Chouest filed a cross-claim against
McClelland seeking contractual defense/indemnity, and a third-party demand for
coverage as an additional assured against Americas Insurance Co. (AIC), the
comprehensive general liability insurer of McClelland.
      McClelland and its primary maritime employer's liability insurer, the
Hartford Accident and Indemnity Co, (Hartford), responded by filing a cross-claim
against Chouest and its P & I carrier Standard Steamship Owners' Protection and
Indemnity Association (Bermuda), Ltd. (Standard.) That cross-claim, which is the

                                        6
      In the struggle to determine the source of Wilson's injuries

and the liability resulting therefrom, the confusion perhaps stems

from the fact that the vessel was designated by the United States

Coast   Guard    as    an   oceanographic     research    vessel     performing

geotechnical surveying work.8           The vessel's unique status as a

registered coring and research vessel thus begs the question:                Did

McClelland's     coring/drilling      operations     (which,    by   necessity,

caused mud to cover the doghouse and thereby created the need to

clean the doghouse) constitute "operation" of the research vessel

by the owner under paragraph 18 of the charter or did they

constitute "actual drilling operations" of the charterer under

paragraph 19?         In fact, both McClelland and Chouest attached

affidavits and deposition excerpts to their respective motions for

and responses in opposition to summary judgment.             These affidavits

core of this appeal, sought coverage for McClelland as an additional assured
under the P & I insurance provided to Chouest by Standard.
      After the plaintiff settled for $130,000.00, to which Chouest contributed
$32,500.00, and all other parties' related claims were either dismissed or
settled, both Chouest's and McClelland's cross-claims and Chouest's third party
demand were taken under submission by the district court on motions for summary
judgment. By a Minute Entry dated October 24, 1990, the district court granted
summary judgment in favor of Chouest providing for indemnity adverse to
McClelland and AIC. The district court correspondingly denied McClelland's
motion for summary judgment against Chouest and Standard. The district court's
Final Judgment dismissed the cross-claim of McClelland and Hartford against
Chouest and Standard, and entered judgment in favor of Chouest on its cross-claim
and third-party demand against McClelland and AIC. Specifically, the court held
McClelland and AIC liable in solido to Chouest "in the amount of $32,500.00, plus
attorney's fees and costs of defense incurred in defending plaintiff's claim in
the main demand, and court costs incurred in prevailing on its motion for summary
judgment." McClelland and AIC, and McClelland and Hartford, filed their
respective notices of appeal separately. AIC, however, later successfully moved
for dismissal of its appeal as to Chouest. Thus, only McClelland/Hartford's
appeal of the denial of their motion for summary judgment and of the granting of
Chouest's motion for summary judgment remains.
      8
            In accordance with 46 U.S.C. § 2101(18), the R/V R.L. PERKINS was
designated as an oceanographic research vessel on July 6, 1989, such designation
remained in effect until July 6, 1991. The vessel's designation was confirmed in
a letter from J.P. Wysocki, Commander, U.S. Coast Guard, Officer in Charge,
Marine Inspection.

                                        7
and deposition excerpts, which were submitted by both parties as

compelling evidence of the actual intent of the signatories to the

charter, were wisely not pursued by the district court in its

minute entry granting summary judgment in favor of Chouest and

against McClelland.      The district court recognized, and we agree,

that a clear reading of the unambiguous, relevant portions of the

charter party, namely clauses 18 and 19, resolves this dispute.

When interpreting unambiguous provisions of a time charter, the

charter party should be read as a whole, and a court may not look

beyond the written language of the charter to determine the intent

of the parties.    Hardy v. Gulf Oil Corp., 949 F.2d 826, 834 (5th

Cir. 1992);    Atlantic Lines, Ltd. v. Narwhal, Ltd., 514 F.2d 726,

730 (5th Cir. 1975); Hicks v. Ocean Drilling and Exploration Co.,

512 F.2d 817, 825 (5th Cir. 1975), cert. denied sub nom. H.B.

Buster Hughes, Inc. v. Ocean Drilling and Exploration Co., 423 U.S.

1050, 96 S.Ct. 777, 46 L.Ed.2d 639 (1976).

                   Reading The Charter As A Whole

     The charter's apportionment of the "mirror-image" indemnity

obligations in paragraphs 18 and 19 is entirely consistent with

McClelland's and Chouest's division of responsibility in the day-

to-day operation of the vessel:            McClelland was responsible for

operating,    manning,    repairing,       maintaining   and   cleaning   its

equipment, and, according to paragraph 7(a) of the charter, OWNER'S

RESPONSIBILITY, Chouest

     agree[d] to operate and navigate the Vessel for trips
     involving CHARTERER's operations, to transport, berth,
     and carry such personnel, material and/or equipment as
     CHARTERER may direct, and to handle, control, operate,

                                       8
       maintain and repair the said mooring spread including all
       safe anchor placing and retrieving, for which OWNER shall
       be solely responsible.

Paragraph 12(a) of the charter, CREW, provides that "[t]he primary

duties of the [Chouest] crew of the Vessel shall be to operate,

navigate, and maintain the Vessel, including the mooring spread,

and the crew shall not be required to load or unload [McClelland's]

supplies     or    cargo."       Finally,      paragraph       14   of   the   charter,

RESPONSIBILITY FOR CARGO, provides that "[t]he CHARTERER will be

responsible       for   damage   or    loss     of    their    cargo     regardless   of

whosoever caused."        The charter, therefore, is unambiguously clear

that   the   obligations       of     Chouest    as    owner     and     McClelland   as

charterer were separate and distinct:                 Chouest did not operate the

McClelland equipment, and McClelland did not operate the vessel.

Thus, McClelland is incorrect in characterizing its core sampling

activity as a "vessel" operation simply because the R/V R.L.

PERKINS provided the base from which McClelland's core sampling was

performed.        Lanasse v. Travelers Insurance Co., 450 F.2d 580, 583-

584 (5th Cir. 1971), cert. denied sub nom. Chevron Oil Co.,

California Co. Division v. Royal Insurance Co., 406 U.S. 921, 92

S.Ct. 1779, 32 L.Ed.2d 120 (1972).                   In fact, under McClelland's

interpretation of Chouest's protection and indemnity obligations,

the charter ends up as an absurdity:                    According to McClelland,

C h o u e s t           w o u l d        b e          e n t i t l e d          t o

defense/contribution/indemnity/additional                     insured    status   under

Clause 19, yet it also would have to provide protection and

indemnity coverage to McClelland for those identical liabilities

                                          9
(claims arising out of McClelland's core sampling operation). This

is not what the parties bargained for.                  The charter must be

construed   to   make    sense    and    to   reflect   the    intent    of   the

contracting parties.     See Lirette v. Popich Bros. Water Transport,

Inc., 699 F.2d 725, 728 n. 11 (5th Cir. 1983); M.O.N.T. Boat Rental

v. Union Oil Co., 613 F.2d 576, 579 (5th Cir. 1980).

      Furthermore, we have broadly construed language similar to the

"arising out of charterer's actual drilling operations" language in

clause 19 of the McClelland/Chouest time charter "to unambiguously

encompass all activities reasonably incident or anticipated by the

principal activity of the contract."            Fontenot v. Mesa Petroleum

Co., 791 F.2d 1207, 1214 (5th Cir. 1986).                  In Fontenot, the

namesake    plaintiff,    an     oil    rig   worker,    was   injured    after

disembarking from a helicopter when he lost his balance on a

slippery heliport surface.        In the ensuing multi-party donnybrook,

the   rig owner, Rowandrill, sought indemnity for paying its share

of Fontenot's settled claim from the charterer, Mesa, on the basis

of reciprocal indemnity agreements in the Rowandrill-Mesa charter.

Under the charter, Mesa agreed

      to protect, defend, indemnify and save [Rowandrill] from
      and against all claims, demands and causes of action of
      every kind and character, without limit and without
      regard to the cause or causes thereof or the negligence
      of any party, arising in connection herewith in favor of
      [Mesa]'s employees, [Mesa]'s contractors or their
      employees other than [Rowandrill's employees or its
      subcontractors or their employees] on account of bodily
      injury, death or damage to property.

Id. at 1213 (emphasis added).

      In denying indemnity to Rowandrill under this provision, the

                                        10
District Court held that Fontenot's claim was not one "arising in

connection herewith" because the use of the heliport was only

incidental to the business of drilling a well or wells, the stated

purpose   of   the   contract.      Id.     The   Fifth   Circuit    reversed,

construing the charter broadly, and held:

      where the presence of the injured person at the scene of
      the injury is attributable to or might reasonably be
      anticipated by his employment responsibilities, then his
      injuries    occur    "in    connection     with"    those
      responsibilities. It is irrelevant that the person is
      not at that moment performing services or that the injury
      results from an activity not encompassed by the
      employer's contractual undertakings.

Id. at 1215.9

      Likewise, for purposes of McClelland's hold harmless agreement

in Clause 19 of the McClelland/Chouest charter, Wilson's injury,

sustained while cleaning McClelland equipment under McClelland's

orders, was attributable to and reasonably anticipated by his

employment responsibilities as a McClelland contractor employee.

In fact, Paragraph 19 of the charter, CHARTERER'S HOLD HARMLESS,

quite clearly designates those instances where McClelland will not

hold Chouest harmless, and cleaning of McClelland equipment is NOT

one of them:

      CHARTERER'S Comprehensive General Liability Insurance
      shall name OWNER, and its affiliated or subsidiary
      companies as additional assureds, but only with respect
      to actual drilling operations of the CHARTERER, and not
      with respect to the handling, operation, maintenance and
      control of the mooring spread, including placing and

      9
             The charter provision in Fontenot applied to any claim "arising in
connection herewith", whereas the charter provision in the present case applies
to claims "arising directly out of [McClelland]'s actual drilling operations."
This is a distinction without a substantial difference. See Smith v. Tenneco Oil
Co., Inc., 803 F.2d 1386, 1388 (5th Cir. 1986).

                                      11
       retrieving of all anchors, for which OWNER shall be fully
       responsible, including liabilities, claims, and damages
       to third parties from which OWNER shall hold CHARTERER
       harmless.

Had McClelland specifically intended that Chouest be responsible

for liability arising from cleaning the McClelland equipment on

Chouest's vessel, then McClelland surely could have indicated as

such.   Indeed, McClelland, the author of the charter (according to

Chouest's brief), explicitly provided that Chouest would be solely

responsible for liability arising from the operation of the mooring

spread and the placement of the vessel's anchors.10                      With such

specificity as its norm, McClelland failed to assign Chouest the

responsibility     of   cleaning,     or      for   that     matter,    maintaining

McClelland's equipment. It is equally clear that the charter party

does    not   require   Chouest,    as     the      vessel    owner-operator,     to

indemnify McClelland for liability arising from the cleaning of

McClelland's equipment.         Therefore, such cleaning, a McClelland

responsibility,      was   an    activity        "arising     directly    out    of"

McClelland's     "actual    drilling      operations."          After    all,   "[a]

contract of indemnity should be construed to cover all losses,

damages, or liabilities which reasonably appear to have been within

the contemplation of the parties . . . ."                  Corbitt v. Diamond M.

Drilling Co., 654 F.2d 329, 333 (5th Cir. Unit A Aug. 1981).

Wilson's claim arose directly out of McClelland's actual drilling

      10
            For example, if McClelland improperly directed Chouest in the
placement of the vessel's anchors, then, McClelland's improper direction
notwithstanding, such a mistake, if a covered risk, would constitute a vessel
liability to which Chouest's protection and indemnity coverage would respond.

                                         12
operations.11

                                Wrapping It Up

      Because no genuine issue exists as to any material fact

concerning the application of clauses 18 and 19 of the McClelland-

Chouest charter, McClelland is not entitled to be held harmless for

Wilson's accident under Chouest's P & I policy as a matter of law,

and, conversely,      Chouest    is   entitled    to   be   held   harmless   by

McClelland.

      The judgment of the district court is AFFIRMED.

      11
            We do not reach the question, as we did in Lanasse v. Travelers
Insurance Co., 450 F.2d 580 (5th Cir. 1971), cert. denied sub nom. Chevron Oil
Co., California Co. Division v. Royal Insurance Co., 406 U.S. 921, 92 S.Ct. 1779,
32 L.Ed.2d 120 (1972), of whether a P & I underwriter could recover against its
own additional assured in the face of an explicit policy provision waiving
subrogation. Lanasse, 450 F.2d at 585.

                                       13