Phillips Petroleum v. Production Sys Inc, et al

*Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-30791
Summary Calendar
PHILLIPS PETROLEUM COMPANY,
Plaintiff-Appellant,
versus
PRODUCTION SYSTEMS, INC.; BUZZY P. INC.; WILLIAM LYNN KELLEY;
KELLEY CONSULTING, INC.; PRODUCTION SERVICES GROUP/PRODUCTION
SYSTEMS, INC.,
Defendants-Appellees.
_________________________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
(00-CV-3010-R)
_________________________________________________________________
November 29, 2001
Before HIGGINBOTHAM, WIENER, and BARKSDALE, Circuit Judges.
PER CURIAM:*
Claiming that the Louisiana Oilfield Indemnity Act (LOIA) does
not prohibit an agreement requiring Production Systems, Inc. (PSI),
to indemnify Phillips Petroleum, Inc. for its vicarious liability
resulting from the negligence of a joint employee of PSI and
Phillips, Phillips contests the summary judgment awarded PSI.
AFFIRMED.

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I.
This action relates to a Phillips well. Under a temporary
labor agreement, PSI agreed to lease employees to Phillips. The
agreement contained the following indemnity provision:
[PSI] warrants that each leased employee shall
fully comply with all laws, rules, regulations
and/or ordinances of all governments and all
agencies thereof while performing work for
[Phillips] as a leased employee, and [PSI]
shall indemnify and hold [Phillips] harmless
from all costs, fines, penalties, expenses
(including attorney’s fees), and damages that
may directly or indirectly arise as a result
of said leased employee’s failure or alleged
failure to comply with any of same.
One of the leased employees, Kelly Lee, while operating
Phillips’ vessel, injured a third party. In an action separate
from this one, it was determined: that Lee was negligent in his
operation of the vessel, Barthelemy v. Phillips Petroleum Co., No.
96-2226, 1999 WL 65024, at *4 (E.D. La. 9 Feb. 1999), aff’d, 211
F.3d 594 (5th Cir. 2000)(table); and that Phillips and PSI were
both vicariously liable for the actions of their joint employee,
Lee, id. at *3 n.9, *6.
Phillips brought this action, claiming that, under the above
quoted portion of the temporary labor agreement, PSI was obligated
to indemnify Phillips for Lee’s negligence. On cross-motions for
summary judgment and PSI’s was granted, on the basis that the LOIA
prohibited Phillips from requiring that PSI indemnify it for the
negligence of Lee, a Phillips employee.

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II.
A summary judgment is reviewed de novo, applying the identical
standard used by the district court. E.g., Stewart v. Murphy, 174
F.3d 530, 533 (5th Cir.), cert. denied, 528 U.S. 906 (1999). Such
judgment should be granted if “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law.” FED. R. CIV. P. 56(c). “We view the pleadings
and summary judgment evidence in the light most favorable to the
nonmovant.” Stewart, 174 F.3d at 533.
We must determine whether, under Louisiana Law, Phillips may
enforce the indemnity provision against PSI where Phillips, as a
joint employer, is vicariously liable for Lee’s negligence. Along
this line, the purpose of the LOIA is “to protect Louisiana
oilfield contractors from over[-]reaching principals who force the
contractors through indemnity agreements to bear the risk of the
principal’s negligence”. Roberts v. Energy Dev. Corp., 104 F.3d
782, 784 (5th Cir. 1997); see LA. REV. STAT. ANN. § 9:2780(A). The
LOIA provides:
Any provision contained in, collateral to, or
affecting an agreement pertaining to a well
for oil, gas, or water, or drilling for
minerals which occur in a solid, liquid,
gaseous, or other state, is void and
unenforceable to the extent that it purports
to or does provide for defense or indemnity,
or either, to the indemnitee against loss or

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liability for damages arising out of or
resulting from death or bodily injury to
persons, which is caused by or results from
the sole or concurrent negligence or fault
(strict liability) of the indemnitee, or an
agent, employee, or an independent contractor
who is directly responsible to the indemnitee.
LA. REV. STAT. ANN. § 9:2780(B) (West Supp. 2001)(emphasis added).
Phillips contends: (1) because it was a joint employer of
Lee, the LOIA does not apply, and (2) because it was only
vicariously liable, the indemnity agreement does not run counter to
the LOIA, as Phillips would not be indemnified for its own
negligent acts.
As for the first contention, Phillips admits it was a joint
employer of Lee; restated, it does not contend that Lee should not
be considered its employee. Accordingly, Phillips has not
demonstrated that Lee, although a joint employee, was not its
employee within the contemplation of the LOIA.
Phillips’ second contention fares no better. The LOIA is
meant to prohibit an entity, such as Phillips, from passing, to
another entity, liability resulting from, inter alia, the acts of
the first entity’s employee. When an employee is negligent, the
employer’s liability will most often arise through vicarious
liability. To accept the distinction proposed by Phillips would
render the LOIA useless, because the liability of the employer
seeking indemnity is many times vicarious in nature.

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Accordingly, because Lee was an employee of Phillips, Phillips
cannot escape the provisions of the LOIA based on the nature of its
liability. In the light of our holding, we need not reach the
alternative reasons to affirm proposed by PSI.
III.
For the foregoing reasons, the judgment is
AFFIRMED.

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