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THE FIFTH CIRCUIT URGES A NEW TEST FOR MARITIME CONTRACTS

The issue before the Fifth Circuit in In re: Limitation Complaint of Larry Doiron, 2017 U.S. App. LEXIS 3675 (5th Cir., Feb 27, 2017, revised opinion) was whether the contract was a maritime one. The contract was one to perform flow-back services to improve the performance of an offshore natural-gas well when performance eventually required the use of a crane barge. While the Court applied the Davis factors, a new test was urged.

In this case, Apache Corporation and Defendants, Specialty Rental Tools & Supply (STS) entered into a master service contract ("MSC"). The MSC contained an indemnification provision that required STS to defend and indemnify Apache and its "Company Group" against all claims for property damage or bodily injury. Plaintiffs, Larry Doiron, Inc. and Robert Jackson were part of the Company Group and covered by the MSC. A worker was injured when he clutched the crane and fell onto the deck of the barge.

The specific issue before the court was whether maritime or state law should be applied to determine the validity of the MSC's indemnity clause. The MSC contained a choice of law provision providing for general maritime law but in the event maritime law is inapplicable, the law of thte state in which the work is performed should apply. In Davis & Songs, Inc. v. Gulf Oil Corp., 919 F.2d 313 (5th Cir. 1990), the Fifth Circuit articulated the legal framework for determining whether a contract is maritime. The court noted however, that "[d]istinguishing between maritime and non-maritime contracts 'turns on a minute parsing of the facts,' but we are bound by the Davis approach-however inexact it may be."

The Davis court articulated a two part test. First courts determine the nature of the contract by reference to its historical treatment. If the historical treatment is unclear, the court must consider six factors:

1) [W]hat does the specific work order in effect at the time of injury provide?

2) [W]hat work did the crew assigned under the work order actually do?

3) [W]as the crew assigned to work aboard a vessel in navigable waters[?]

4) [T]o what extent did the work being done relate to the mission of that vessel?

5) [W]hat was the principal work of the injured worker? and

6) [W]hat work was the injured worker actually doing at the time of injury?

Applying Davis, the Court determined there was no clarity to the historical treatment of contracts because the Fifth Circuit had not previously considered flow-back operations. As a result, the court looked to the six Davis factors and found that four of the six factors indicate the contract was maritime in nature-factors one, two four and six. The Fifth Circuit then looked to cases that have applied Davis and noted that the gravamen of the inquiry is not whether the contract required use of a vessel but whether the execution of the contract required a vessel. In this case the execution of the contract eventually required the use of a vessel, a crane barge. As a result the Court held that the contract was a maritime contract.

In his concurring opinion, Judge Davis, joine by Judge Southwick, wrote separately to implore the court to grant rehearing en banc due to the confusing and often inconsistent decisions of the court in the past on maritime contracts. He urged the court to abandon the Davis test and to instead adopt a more uniform approach which was adopted by the Fifth Circuit en banc in Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778, 787 (5th Cir. 2009) (en banc) and which the Supreme Court adopted in Norfolk Southern Railway Co. v. Kirby, 543 U.S. 204 (2004).

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