Baldwin Haspel Burke & Mayer LLC

Maritime Update: 5th Circuit Adjusts Doiron Test for Mixed-Services Contracts

Bill Schwartz - 

On November 11, 2019, the Fifth Circuit gave further guidance on how to apply the Doiron test determining if a contract is maritime in the mixed-services contract setting.

In the decision rendered in BARRIOS v. CENTAUR, L.L.C. v. RIVER VENTURES, L.L.C., Barrios—an employee of Centaur, L.L.C. (“Centaur”)—was injured while offloading a generator from a crew boat to a barge. The crew boat was owned and operated by River Ventures, L.L.C. (“River Ventures”); the barge was leased by Centaur. Barrios sued River Ventures and Centaur for vessel negligence under general maritime law and the Jones Act. River Ventures crossclaimed against Centaur for contractual indemnity. The district court granted summary judgment to Centaur. River Ventures appealed.

Before Barrios’ accident, non-party United Bulk Terminals Davant, L.L.C. (“UBT”), executed a Master Service Contract (the “MSC”) with Centaur, a small marine construction company. The MSC contained two provisions relevant to this appeal. The first imposed on Centaur an obligation to indemnify UBT and its contractors. The second required Centaur to obtain insurance covering those same parties.

Centaur and UBT executed several work orders for projects at the Davant Facility. One—for which Centaur submitted a proposal in October 2015—required installation of a concrete containment rail at one of the facility’s docks. Centaur’s proposal indicated that, at an increased cost, both a barge and a tug boat would be required to complete the project. UBT accepted the proposal. To perform the work, Centaur chartered barge DB-582, which was equipped with a crane. Because DB-582 was a “dumb” barge that couldn’t self-navigate, it was moved up and down the river using a tugboat and winch. Because the dock was most easily accessed by boat, UBT contracted with River Ventures for a crewed vessel—the M/V TROOPER—to transport Centaur’s employees from the parking area to their worksite. Centaur also used the crew boat to ferry tools and equipment, in addition to its employees.

On the day of the incident, Barrios and other Centaur employees were transporting a portable generator on the crew boat. While attempting to offload the generator, the M/V TROOPER began to separate from DB-582. That movement caused Barrios to fall into the river, where the generator hit him in the head, severely injuring him.

Barrios sued River Ventures and Centaur alleging vessel negligence under general maritime law and the Jones Act. River Ventures, averring that it was a third-party beneficiary of the Dock Contract, crossclaimed against Centaur for contractual indemnity and additional assured status under its insurance policies.

Centaur moved for summary judgment on River Ventures’ cross claim, averring that the Dock Contract was non-maritime and that its indemnity provision was therefore void under Louisiana law. The district trial court held that the Dock Contract was a “land based construction contract” governed by Louisiana law. It granted summary judgment because the Louisiana Construction Anti-Indemnity Statute (“LCAIS”) “applie[d] to prohibit the indemnity and insurance provisions.

River Ventures filed an appeal.

In analyzing the contract issue, the Fifth Circuit referred back to the Supreme Court case of Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14 (2004) which it concluded had “erected a guidepost” in deciding whether a contract was maritime. “The answer depends upon the nature and character of the contract, and the true criterion is whether it has reference to maritime service or maritime transactions.” That approach vindicated the fundamental interest undergirding maritime jurisdiction: “the protection of maritime commerce.”

The Fifth Circuit in the case of In re Larry Doiron, Inc., 879 F.3d 568 (5th Cir.) (en banc), cert. denied, 138 S. Ct. 2033 (2018) sought to remedy prior case law of the court and harmonize its future decisions in conformity with the Supreme Court’s Kirby decision. The Doiron case involved services in the oil and gas exploration context. The Doiron court adopted a two-question test—centering the inquiry “on the contract and the expectations of the parties,” to determine whether a contract was maritime:

First, is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters?

Second, if the answer to the above question is “yes,” does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract?

In determining how to now apply Doiron outside the oil-and-gas sector, the Court found it should first ask whether (1) the contract is “one to provide services to facilitate [activity] on navigable waters,” and then (2) if so, whether “the contract provide[s] or . . . the parties expect that a vessel will play a substantial role in the completion of the contract.” Kirby declares that “[c]onceptually, so long as a . . . (contract) . . . requires as . . . its purpose . . . to effectuate maritime commerce . . . (it is) . . . thus . . . a maritime contract.”

Defining how to apply Doiron’s two-part test applies as written to all mixed-services contracts, the Fifth Circuit held in order to be maritime, a contract (1) must be for services to facilitate activity on navigable waters, and (2) must provide, or the parties must expect, that a vessel will play a substantial role in the completion of the contract.

In turning to the facts of the instant case, the Court found the parties recognized the DB-582 provided a necessary work platform, an essential storage space for equipment and tools and a flexible area for other endeavors related to the construction work. The parties’ expectations about the use of the barge were borne out. Just as the proposal indicated, Centaur’s crew used DB-582 to perform construction work for the containment rail, including “drilling holes, cutting rebar, and pouring forms.” The crew also used the barge for several activities related to the construction, including storing and packing tools, holding safety meetings, taking breaks and eating lunch. That Centaur’s workers may have worked on the dock a majority of the time doesn’t alter that conclusion.

In sum, the Appeals Court held that the district court below had misapplied Doiron and erroneously concluded that the Dock Contract was non-maritime. Because federal maritime law applied, the LCAIS did not. The summary judgment was reversed and the case remanded back to the trial court.

The full decision can be found here.

If you have any questions regarding this maritime matter, please contact Bill Schwartz at (504) 569-2900 or wschwartz@bhbmlaw.com.


  |  

Meritas

Connect with us