Plaintiff’s Construction Defect Claims Against Offshore Spar Manufacturer Dismissed

In June 2011, an offshore worker was injured on a spar (a floating platform shaped like a giant buoy) on the outer continental shelf when he was struck in the face with the flange of a valve.  He filed a personal injury lawsuit against the manufacturer of the spar, McDermott, Inc., alleging his injury was caused by defective design and construction of the spar.

 

McDermott filed a motion for summary judgment, arguing that the plaintiff’s right of action was perempted under Louisiana law.  McDermott asserted that because plaintiff was covered by the Outer Continental Shelf Lands Act (OCSLA), the law of the adjacent state (Louisiana) applied as a surrogate to federal law.  McDermott then pointed to a Louisiana statute, La. R.S. 9:2772, which provides a five year peremptive period in which to bring an action arising out of deficiencies in the design or construction of immovable property.  Because McDermott delivered the finished spar to its customer (plaintiff’s employer) in 2004, plaintiff’s design defect claim filed in 2013, was time barred.  The District Court agreed with McDermott and dismissed plaintiff’s claims.  Plaintiff appealed to the U.S. Fifth Circuit Court of Appeals.

 

On appeal, plaintiff argued that La. R.S. 9:2772 did not apply to his claim because the spar was not an immovable, which was a matter of first impression for the Court.  The Fifth Circuit had previously determined that a spar is not a vessel for purposes of the Jones Act, but no court had ever addressed whether a spar is immovable property under Louisiana law.  The Court noted that fixed platforms are considered immovable property.  The Court further noted that the spar in question was permanently moored to the ocean floor, was intended to remain in its location for its twenty year life, and it would take months of planning to move the spar.  The Fifth Circuit concluded that enough similarities exist between a spar and fixed platform that a spar is immovable property under Louisiana law.  Thus, plaintiff’s design defect claims were dismissed as time barred by state law.

 

Hefren v. McDermott, Inc.

Fifth Circuit Holds “Zone of Danger” Test Not Applicable Under the LHWCA

In a recent unpublished opinion, the U.S. Fifth Circuit Court of Appeals affirmed the Administrative Law Judge’s award of benefits to a longshoreman who sustained work-related psychological injuries.  Claimant was operating a forklift when he accidentally struck and killed his co-worker.  Although Claimant was not physically injured, he attempted to assist the deceased co-worker by untangling her from under the forklift. During the entire time that first responders were attempting to save the co-worker, Claimant stood ten to fifteen feet away with a clear view of her.  Claimant spent the rest of the day reporting what he saw to multiple state and federal law enforcement agencies.

 

Claimant was subsequently diagnosed with post-traumatic stress disorder, depression, and anxiety; he was also being monitored for suicide.  Both Claimant’s treating physicians as well as the Employer’s Second Medical Opinion physician opined that Claimant was disabled from returning to work.  However, the SMO physician opined that Claimant was under-medicated, and Employer requested a Department of Labor (“DOL”) Independent Medical Examination (“IME”). The DOL IME physician opined that Claimant did not suffer from PTSD because Claimant did not experience a threat himself and was never in danger during the accident.  Further, the DOL IME opined that Claimant demonstrated significant evidence of malingering.   Based on this report, Employer terminated indemnity and medical benefits, and Claimant filed a claim.

 

Employer disputed the claim, arguing that Claimant was not entitled to compensation under the LHWCA for a psychological injury because he did not sustain a physical injury or was not placed in immediate risk of physical injury, i.e., Claimant was not in the “zone of danger” set forth in Consolidated Rail Corp. v. Gottshall, 512 U.S. 532 (1994).  Employer further contended that the DOL IME’s opinion that Claimant did not suffer from PTSD was dispositive.

 

The Fifth Circuit (in affirming the ALJ and the BRB) held that the “zone of danger” test was a tort concept inapplicable to the LHWCA.  Further, Section 2(2) defining “injury” did not distinguish between physical and psychological injuries. Nowhere in the statute was there a requirement that physical injury accompany a psychological injury.  The Fifth Circuit further affirmed the ALJ’s findings that the DOL IME physician’s report was to be given little weight.  In examining the plain language of Section 7(e), the court held nothing in the LHWCA required an ALJ to adopt a DOL IME physician’s opinion as binding.  The ALJ’s finding that the numerous other doctors who diagnosed PTSD and disabled Claimant was supported by substantial evidence.

 

Ceres Marine Terminal Inc. v. Director, OWCP

Fifth Circuit Weighs in on P&I Insurance Coverage Dispute

Following a verdict in favor a Jones Act seaman, Larry Naquin, for injuries he sustained in a land-based crane accident, an insurance coverage dispute arose between Naquin’s employer, Elevating Boats, LLC (“EBI”), and its insurance companies, State National Insurance Company (“SNIC”) and Certain London Insurers (“London Insurers”).  EBI alleged that SNIC and London Insurers breached their insurance contracts by denying EBI’s claims related to Naquin’s accident and failing to provide defense and indemnity.  EBI also sought damages for bad faith on the part of SNIC and London Insurers.  SNIC moved for summary judgment, arguing there was no coverage for Naquin’s land-based accident under its Protection & Indemnity Policy (the “Policy”) and that EBI failed to provide sufficient notice as required by the Policy.  The District Court granted summary judgment and entered final judgment in favor of SNIC.

 

On appeal, the Fifth Circuit reviewed the “Indemnity” provision of the policy that called for indemnification of EBI “as owner of the Vessel” for liability arising out of “any casualty or occurrence[.]”  SNIC argued that the “as owner of the Vessel” clause did not provide coverage for EBI’s negligence in Naquin’s land-based accident.  EBI’s assertion to the District Court was that the “any casualty or occurrence” clause provided coverage for the accident.  The Fifth Circuit, interpreting Louisiana law, found that the only way to give meaning to the “Indemnity” provision of the Policy was to construe it as limiting coverage to “any casualty or occurrence” which arises out of EBI’s conduct “as owner of the Vessel.”  Since Naquin’s injuries resulted from a land-based crane accident, the Court held that there was no causal operational relation between the vessel and injury so as to extend coverage of the Policy in this instance.  The District Court’s summary judgment was affirmed.

 

Naquin v. Elevating Boats, L.L.C., et al.

Clean-Up Responder Defendants Dismissed from Deepwater Horizon Multi-District Litigation

On April 22, 2010, the Deepwater Horizon rig sank following numerous fires and explosions resulting from a loss of well control.  Oil subsequently discharged into the Gulf of Mexico, and flow continued for three months until the well was capped on July 15, 2010 and subsequently sealed with completion of a relief well on September 19, 2010.  Clean-up activities and efforts to minimize the spill’s impact continued for months.  Response activities included skimming oil from the surface, conducting in situ burning of oil, placing containment and sorbent boom, and on-shore and beach clean-up.  Clean-up responders dispersed chemical agents designed to emulsify, disperse, or solubilize the oil in the water.

 

Of the numerous parties named as defendants in the master complaint were several companies contracted as clean-up responders.  Plaintiffs alleged that the clean-up responders “failed to use reasonably safe dispersant chemicals or other chemicals in their attempts to respond to the Oil Spill, and thereby exacerbated the pollution of the Gulf of Mexico and injury to Plaintiffs,” “ignored worker safety concerns,” and failed to supply workers with appropriate equipment such as respirators.”  The clean-up responders moved to dismiss arguing that they were entitled to derivative immunity under the Clean Water Act (“CWA”), were entitled to discretionary immunity under the Federal Tort Claims Act (“FTCA”), and that the plaintiffs’ claims were preempted as a matter of law.  The Eastern District of Louisiana initially denied these motions to dismiss and issued a Lone Pine order to conduct discovery on these claims.  The clean-up responders subsequently filed a motion for summary judgment at the conclusion of discovery on the issues raised in their initial motion to dismiss.

 

The court held that the clean-up responders were entitled to derivative immunity under the CWA and to discretionary immunity under the FTCA because the clean-up responders had adhered to and acted within the scope of the federal government’s directives in their clean-up efforts.  Further, the court held that it was not possible for the clean-up responders to simultaneously comply with both the federal directives of CWA and FTCA and with state or maritime law; the clean-up responders had therefore demonstrated a prima facie basis for dismissal of their claims based on conflict pre-emption.  Thus, claims against the clean-up responder defendants were dismissed.