IMMOVABLE PROPERTY ON THE OUTER CONTINENTAL SHELF

By Caitlin Morgenstern of Koch & Schmidt posted in Outer Continental Shelf Lands Act on Friday, July 8, 2016.

In Hefren v McDermott, the Fifth Circuit considered the issue of whether an offshore facility was immovable property, resulting in the preemption of the plaintiff’s claims under Louisiana law.

In March 2002, Murphy Exploration & Production Company, USA (“Murphy”) contracted with McDermott, Inc. (“McDermott”) to have McDermott design and construct the Front Runner Spar (“Front Runner”), an offshore facility to be used for removing and processing petroleum from the seabed of the Gulf of Mexico. In May 2004, Murphy accepted delivery of the Front Runner and affixed it to the Outer Continental Shelf (“OCS”) adjacent to Louisiana.

On June 6, 2011, the plaintiff, James Hefren, an employee of Murphy, was injured when a flange of a valve struck him in the face.

Hefren brought a Jones Act suit against Murphy for its negligence and alleged that McDermott failed to properly design and construct the Front Runner. The suit was removed to federal court, and McDermott filed a motion to dismiss Hefren’s claims.

McDermott asserted that plaintiff’s claims were barred under Louisiana statutory law, specifically La. R.S.§ 9:2772, which provides that no action arising out of deficiencies in the design or construction of immovable property can be brought five years after the date on which the property is accepted by the owner. McDermott argued plaintiff’s claims against it were barred because Hefren’s claims were brought in 2013 and Murphy took possession of the Spar in 2004.

Hefren argued that the Front Runner was not immovable property because it was not attached to the seabed and its mooring system allowed it to be unmoored and transported. The district court granted McDermott’s motion and dismissed Hefren’s claims against McDermott. Plaintiff appealed.

The Fifth Circuit applied Louisiana law under the Outer Continental Shelf Lands Act (OCSLA) because the Spar was located on the OCS adjacent to Louisiana. The Fifth Circuit stated that a fixed offshore drilling platform constituted an immovable “building.” In determining whether an object is a building, there is an inherent requirement that there be a structure of some permanence. Louisiana case law has found that fixed drilling platforms were considered immovable buildings. Although spars are not the same as fixed drilling platforms, the Fifth Circuit previously noted that a spar can resemble a fixed drilling platform. The Front Runner Spar has not moved from its present location, is intended to remain there for its twenty-year life, and has a permanent mooring system and as a result it has “some permanence” like a “building.”

As a result, under La. R.S.§ 9:2772 the plaintiff’s claim was barred because it was brought more than five years after the date on which the property was accepted by Murphy.