In re: Graham Offshr ( 2002 )

REVISED APRIL 9, 2002
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
No. 00-31032
_______________________
In Re: In the Matter of GRAHAM OFFSHORE, INC., as owner and
GRAHAM MARINE, INC., as owner pro hac vice of the
vessel M/V Miss Paula, her engines, tackle,
appurtenances, furniture, etc, praying for Exoneration
from or Limitation of Liability.
GRAHAM OFFSHORE, INC.; GRAHAM MARINE, INC.,
Petitioners-Appellants,
versus
EPOCH WELL LOGGING; INDUSTRIAL INDEMNITY; JAMES ALLAWAY;
JOCELYN BATES,
Claimants-Appellees,
versus
TEXACO EXPLORATION AND PRODUCTION, INC.; TEXACO, INC.;
TRANSOCEAN OFFSHORE INC.; formerly known as Sonat Offshore
Drilling, Inc.,
Claimants-Appellants.
- - - - - - - - - - - - - - - -
JAMES D. ALLAWAY,
Plaintiff-Appellee,
and
EPOCH WELL LOGGING; INDUSTRIAL INDEMNITY,
Intervenors-Appellees,
versus
TEXACO, INC.; ET AL
Defendants,
TEXACO INC.; TEXACO EXPLORATION AND PRODUCTION, INC.,
Defendants-Appellants,
and
TRANSOCEAN OFFSHORE VENTURES, INC.,
Defendant-Third Party Plaintiff-Appellant,
versus
GRAHAM MARINE, INC.,
Defendant-Third Party Defendant-Appellant,
and
GRAHAM OFFSHORE, INC.,
Third Party Defendant-Appellant.
- - - - - - - - - - - - - - - -
JOCELYN N. BATES,
Plaintiff-Appellee,
and
EPOCH WELL LOGGING; INDUSTRIAL INDEMNITY,
Intervenors-Appellees,
versus
TEXACO, INC.; ET AL,
Defendants,
TEXACO, INC.; TEXACO EXPLORATION AND PRODUCTION, INC.,
2
Defendants-Appellants,
and
TRANSOCEAN OFFSHORE VENTURES, INC.,
Defendant-Third Party Plaintiff-Appellant,
versus
GRAHAM MARINE, INC.,
Defendant-Third Party Defendant-Appellant,
and
GRAHAM OFFSHORE, INC.,
Third Party Defendant-Appellant.
____________________
NO. 00-31239
____________________
In Re: In the Matter of the Complaint of GRAHAM OFFSHORE, INC.,
as owner; GRAHAM MARINE, INC., as owner pro hac vice of the
vessel M/V Miss Paula, her engines, tackle, appurtenances,
furniture, ect, for Exoneration from or Limitation of Liability.
GRAHAM OFFSHORE INC., as owner; GRAHAM MARINE, INC., as owner
pro hac vice of the vessel M/V Miss Paula, her engines,
tackle, appurtenances, furniture, ect, praying for Exoneration
from or Limitation of Liability;
Petitioners-Appellees-Cross Appellants,
EPOCH WELL LOGGING,
Intervenor-Appellee,
JAMES ALLAWAY; JOCELYN BATES; INDUSTRIAL INDEMNITY,
Claimants-Appellees,
versus
3
TEXACO EXPLORATION AND PRODUCTION INC.; TEXACO, INC.,
Claimants-Appellants,
versus
TRANSOCEAN OFFSHORE INC., formerly known as Sonat Offshore
Drilling Incorporated,
Claimants-Appellant-Cross Appellee.
- - - - - - - - - - - - -
JAMES D. ALLAWAY,
Plaintiff-Appellee,
EPOCH WELL LOGGING; INDUSTRIAL INDEMNITY,
Intervenors-Appellees,
versus
TEXACO EXPLORATION AND PRODUCTION, INC., TEXACO, INC.,
Defendants-Appellants,
versus
GRAHAM MARINE, INC.,
Defendant-Third Party Defendant-Appellee-Cross Appellant,
GRAHAM OFFSHORE, INC.,
Third Party Defendant-Appellee-Cross Appellant,
versus
TRANSOCEAN OFFSHORE VENTURES, INC.; TRANSOCEAN OFFSHORE, INC.,
Defendants-Third Party Plaintiffs-Appellants-Cross Appellees.
- - - - - - - - - -
JOCELYN N. BATES,
4
Plaintiff-Appellee,
EPOCH WELL LOGGING,
Intervenor-Appellee,
versus
TEXACO EXPLORATION AND PRODUCTION, INC.; TEXACO, INC.,
Defendants-Appellants,
GRAHAM MARINE, INC.,
Defendant-Third Party Defendant-Appellee-Cross Appellant,
GRAHAM OFFSHORE, INC.,
Third Party Defendant-Appellee-Cross Appellant,
INDUSTRIAL INDEMNITY,
Claimant-Appellee,
versus
TRANSOCEAN OFFSHORE VENTURES, INC.; TRANSOCEAN OFFSHORE, INC.,
Defendants-Third Party Plaintiffs-Appellants-Cross Appellees.
_________________________________________________________
Appeals from the United States District Court
for the Eastern District of Louisiana
_________________________________________________________
March 28, 2002
Before DAVIS and JONES, Circuit Judges, and PRADO*, District Judge.
EDITH H. JONES, Circuit Judge:
*
District Judge of the Western District of Texas, sitting
by designation.
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Two former employees of Epoch Well Logging seek
compensation for injuries sustained while they were evacuating a
drilling rig during Hurricane Danny in July 1997. The dispute
centers around the rough voyage of the Miss Paula, a crew boat that
ferried personnel from the drilling rig to shore. The injured
employees filed claims against the owner of the vessel (Graham
Offshore); the vessel’s time-charterer (Texaco); and the owner of
the drilling rig (Transocean). Graham Offshore filed a maritime
limitation action, and Texaco and Transocean filed claims against
Graham Offshore.
While all three defendants appealed from a substantial
judgment that apportioned damages among them, the Graham Offshore
and Texaco appellants settled with appellees while this appeal was
pending. In the only remaining portion of the appeal, we conclude
that the trial court erred in holding Transocean, the rig owner,
liable for errors that were the responsibility of the vessel and,
to a lesser extent, the time-charterer.
I. FACTS AND PROCEDURAL HISTORY
In mid-1997, Texaco Exploration and Production, Inc.
(“Texaco”) chartered the DF-97, a mobile offshore drilling unit
owned by Transocean Offshore Venture, Inc. (“Transocean”), to
conduct drilling operations on the Outer Continental Shelf in the
Gulf of Mexico. The drilling site was located on the Vioska Knoll,
approximately 80 miles south of Mobile, Alabama.
6
As part of this drilling project, Texaco contracted with
Epoch Well Logging, Inc. (“Epoch Well”) to perform mud logging
services on the well. Texaco also chartered a 120-foot crew boat,
the Miss Paula, to provide transportation for personnel and
equipment to and from the DF-97. The Miss Paula was owned by
Graham Offshore, Inc. (“Graham Offshore”) and was docked at Venice,
Louisiana, at the mouth of the Mississippi River.
Tropical Storm Danny formed in the Gulf of Mexico on July
16, 1997, and was eventually upgraded to a category one hurricane.
On July 17, Texaco and Transocean decided that 25 non-essential
workers on the DF-97 should be evacuated.2 Weather reports
available on the 17th indicated that Danny was moving in a
northeasterly direction and would make landfall the following
morning near Houma, Louisiana.
Texaco then contacted Graham Offshore to determine
whether the Miss Paula could be dispatched to the DF-97. At
approximately 4:00 p.m., the captain of the Miss Paula replied that
he could make the voyage, and Texaco ordered him to proceed. After
re-fueling, the Miss Paula departed Venice at 5:45 p.m.
Inexplicably, the captain of the Miss Paula did not
monitor the path of Hurricane Danny. Although the vessel was
equipped with radio and other equipment, the captain relied solely
2
The United States Coast Guard required Texaco to submit
an Emergency Evacuation Plan (“EEP”), which will be discussed in
more detail below.
7
on a television news broadcast he had seen at 5:00. Consequently,
the captain was not aware that the National Weather Service began
reporting around 10:00 p.m. that Hurricane Danny had turned sharply
to the east and was projected to make landfall near Venice.
The Miss Paula arrived at the DF-97 at 11:00 p.m. and
boarded the 25 oil rig workers into the crew boat. Although the
Miss Paula was alongside the DF-97 for approximately 30 minutes,
the representatives of Texaco and Transocean – who had obtained
updated weather information -- did not discuss the hurricane’s
path with the captain or crew of the Miss Paula.
The Miss Paula began its return trip to Venice around
11:30 and soon encountered heavy rain, strong winds, and rough
seas. The vessel was blown off course and ran aground on a sand
bar; the captain freed the boat by reversing the engines, thereby
causing the boat to lurch violently. The captain then took the
Miss Paula to deeper water in the Breton Sound and waited out the
storm. The voyage was unpleasant, but the captain and crew
reported that the boat never took on water or lost power and that
the vessel was not in danger of capsizing or sinking. Miss Paula
returned to port in Venice on the afternoon of July 18, after a 15-
hour voyage that would have taken no more than 6 hours under normal
conditions.
Two employees of Epoch Well -- James Allaway and Jocelyn
Bates -- claimed that they were injured during this voyage of the
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Miss Paula. In March 1998, Graham Offshore filed a liability
limitation action under 46 U.S.C. § 181. Allaway and Bates filed
actions (which were subsequently consolidated) against Graham
Offshore, Texaco, and Transocean. Texaco and Transocean then
sought indemnification from Graham Offshore, asserting that Graham
Offshore had acted negligently. Epoch Well and Industrial
Indemnity intervened to recoup compensation paid to Allaway and
Bates pursuant to the Longshore and Harbor Workers Compensation Act
(“LHWCA”).
The trial was set for December 13, 1999. On December 10,
however, the parties agreed to continue the trial and to try the
issue of damages before determining liability. As part of this
agreement, the defendants pledged to “fund any final judgment [on
damages] . . . on the basis of a one-third contribution each” and
then to try the issue of liability among themselves in order to
determine the ultimate allocation of responsibility for any award
for damages. With the consent of all parties, the district court
entered an order bifurcating the trial.
In March 2000, the district court conducted a non-jury
trial on the issue of damages. The court credited Allaway’s
testimony that the return trip to Venice was “a voyage from hell”
and that Allaway was terrified as he “bounced around” the ship.
The court found that Allaway suffered permanent but relatively
minor injuries to his right knee, his right shoulder, and back.
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The court added, though, that the most significant injury suffered
by Allaway was psychological. The court found that Allaway, though
he had been an offshore oil worker for twenty-five years, suffered
from “severe post-traumatic stress disorder” as a result of “the
extreme fear and fright he experienced during the fifteen hour
voyage aboard the Miss Paula.”
The court found that Jocelyn Bates suffered minor
injuries to her shoulder, arm, and wrist. The court noted that
Bates’s traumatic experience prevented her from taking assignments
that required her to travel offshore by boat. Otherwise, she
suffered from no serious psychological conditions that interfered
with her daily life.
The district court entered judgment on damages, awarding
$765,217 to Allaway and $81,068 to Bates. The court also entered
judgments for the intervenors, Epoch Well and Industrial Indemnity,
in the amounts of $85,897 (against Allaway) and $2,790 (against
Bates) for compensation paid to the claimants under the LHWCA.
Limitation of liability became a moot point, inasmuch as the vessel
is worth more than the combined judgments.
In its order awarding damages, the district court
announced that Graham Offshore, Texaco, and Transocean would be the
only participants in the liability phase of the trial. The court
concluded that the defendants’ December 10th agreement had relieved
10
Allaway and Bates of their burden of proving negligence on the part
of the defendants.
In September 2000, the district court conducted a trial
to apportion liability. Counsel for appellees were not present.
The court found that Graham Offshore breached its duty of
reasonable care to the passengers onboard the Miss Paula.
Specifically, the court found that the captain of the vessel did
not even attempt to obtain updated weather information and that he
negligently failed to realize he was heading directly into the
storm. As to the other defendants, the district court concluded
that Texaco and Transocean had a legal duty to transport the rig
workers safely to shore pursuant to the Emergency Evacuation Plan,
a plan that Coast Guard regulations required Texaco to prepare and
disseminate. According to the district court, Texaco and
Transocean breached this duty by failing to share weather
information with the vessel. The district court also noted that
Texaco owed a legal duty to the passengers because Texaco was the
time-charterer of the Miss Paula and exercised at least partial
control over the timing, mission, and route of the vessel. Having
concluded that all three parties were liable, the district court
then apportioned liability as follows: 60% to Graham Offshore, 20%
to Texaco, and 20% to Transocean.
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II. DISCUSSION
Among several issues raised by Transocean, the question
of Transocean’s legal duties to appellees overarches other issues
in this case and requires our primary attention.
During the liability phase of the trial, the district
court concluded that Transocean had assumed responsibility for the
passengers of the Miss Paula because Transocean had designated its
rig superintendent as the person in charge of implementing the
Emergency Evacuation Plan (EEP). In addition, the district court
may have held that Transocean, like Texaco, shared in a hybrid duty
with Graham for the safe transportation of Allaway and Bates, to
the extent that elements of their transportation fell within
Transocean’s “sphere of control.”3 We review de novo these grounds
for the district court’s conclusion that Transocean owed a legal
duty to Allaway and Bates. Canal Barge Co., Inc. v. Torco Oil Co.,
220 F.3d 370, 376 (5th Cir. 2000).
United States Coast Guard regulations require the
operator of each manned facility on the Outer Continental Shelf to
3
The district court rejected Transocean’s contention that
its liability to Allaway and Bates, employees covered by the LHWCA,
arises only from its status under 33 U.S.C. § 905(b) as a vessel
owner (of a mobile drilling rig). We agree with the district court
that appellees’ claim against Transocean did not rest on vessel-
based negligence, but only upon duties allegedly created by
Texaco’s EEP. We have no occasion to consider the applicability of
§ 905(b) to these facts.
12
submit an Emergency Evacuation Plan, or EEP. 33 C.F.R. §§ 146.140,
146.210. Texaco duly submitted its evacuation plan for the DF-97.
This case involves a “Level I” evacuation of non-essential
personnel to shoreside facilities. The EEP states that evacuation
could be by helicopter or by boat, and it includes an estimate of
the total evacuation time for each method. The EEP also identifies
the sources of weather information to be relied upon in determining
whether to abandon the rig. Significantly, the EEP designates
Transocean’s rig superintendent as the “Person-in-Charge” of
implementing the EEP (except in cases of “well-control
situations”). As the “Person-in-Charge,” the Transocean
representative had the duty to advise Texaco “of any situations
warranting implementation of the EEP.” The contract between Texaco
and Transocean was to the same effect, adding only that Transocean
would consult with Texaco in deciding whether to institute
precautionary measures to safeguard the rig.
Through the EEP and the contract with Texaco, Transocean
was involved in the evacuation of rig workers. The EEP indicates
that Texaco and Transocean would monitor the weather for the
purpose of deciding whether to evacuate the rig, by what means to
evacuate the non-essential personnel, and how to transfer personnel
safely from the rig to the evacuation craft. The plaintiffs do not
contend, nor did the district court find, that Texaco or Transocean
performed these specific duties in a negligent manner.
13
Instead, Allaway and Bates contend that Transocean had a
more general duty imposed by the EEP to ensure that the employees
were transported safely to shore and that Transocean breached this
duty by not transmitting weather information to the vessel. Viewed
in retrospect, Transocean’s failure to discuss weather developments
with the crew of the Miss Paula may have been imprudent. However,
the narrow question before us is whether the EEP imposes a legal
duty on Transocean to oversee the operations of the boat or
helicopter that is used to evacuate personnel from the rig.
Although Transocean’s rig superintendent was the “person in charge”
of implementing the evacuation plan, it does not follow that
Transocean assumed responsibility for every act done in furtherance
of the evacuation. Nothing in Texaco’s evacuation plan for the DF-
97 imposed a duty on Transocean to monitor weather conditions for
the purpose of assisting the Miss Paula in navigation. The general
mission, route, cargo and timing of a chartered vessel’s voyage are
traditionally within the control of the vessel operator and the
time-charterer, see Hodgen v. Forest Oil Corp., 87 F.3d 1512, 1520
(5th Cir. 1996), and the EEP does not alter that arrangement.
In fact, apart from identifying a few specific tasks, the
balance of the EEP regulation requires only an index of resources
and tentative plans for addressing various types of emergencies.
It is by no means clear that the EEP should of its own force create
legal duties. Instead, its purpose appears to be that of requiring
14
offshore operators to foresee and document possible emergency
evacuation scenarios, without any assurance that the planned
remedies are the only feasible plans or even the best plans when an
actual emergency erupts. See 54 Fed. Reg. 21566 (May 18, 1989).
The EEP regulation imposes a duty of documentation, not execution.
Given the limited, though useful, purpose of the EEP, it
makes no sense to hold that its barebones allocation of tasks
affixes legal responsibility on any party to offshore drilling
operations beyond that which is undertaken by contract or imposed
by extrinsic law. The district court thus erred in concluding that
Transocean could be held liable on the basis of a specific duty to
transmit weather information to the Miss Paula that does not exist
in the EEP or of some more general but wholly unarticulated duty of
Transocean’s supervisor as the EEP person-in-charge to guarantee
the flawless execution of the Miss Paula’s task.
Transocean also takes issue with the district court’s
apparent imposition of a hybrid duty upon it to assure Appellees’
safe transportation within the sphere of activity in which
Transocean “exercised at least partial control” with Graham. Since
the court gleaned the duty of an “exercise of partial control” only
from the EEP, a holding we have found erroneous, the hybrid duty
theory fails on that basis alone. More generally, however, the
court’s attribution of any hybrid duty upon Transocean in these
circumstances represents an unwarranted extension of Hodgen. The
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Hodgen decision synthesizes this court’s caselaw describing the
duties of a vessel’s time-charterer to passengers on the vessel.
Texaco was the Miss Paula’s time charterer, not Transocean.
Transocean had no direct contractual relation with Graham and,
according to the record, it never had any direct contact with
Graham concerning routine transportation to and from its rig, much
less the evacuation in the face of Hurricane Danny. Texaco
contracted with Transocean to operate Transocean’s mobile rig, and
Texaco contracted with Graham to supply transportation services to
the rig at Texaco’s instruction. The parties’ practices followed
their contracts. Thus, Texaco as time charterer potentially bore
a hybrid duty to passengers carried by Graham, but neither the
factual nor legal predicate for creating such a duty existed in
Transocean’s fortuitous connection to Graham. Hodgen is
inapplicable.
For these reasons, the judgment against Transocean cannot
stand. Accordingly, the judgment of liability against Transocean
is REVERSED.
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