Signal Oil & Gas Company v. The Barge W-

701 654 F.2d 1164 (5th Cir. 1981)

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Nature of the Case

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Facts

Ps jointly operated an oil production rig in the Gulf of Mexico off the coast of Louisiana. The SLAM pipeline was the conduit for production from the SLAM platform to shore. Sun Oil Company (Sun) operated a platform nearby but did not enjoy similar access to shore. SLAM and Sun negotiated an agreement allowing Sun to hook up to the SLAM pipeline. Sun agreed to indemnify SLAM for any losses it might suffer thereby. Sun contracted with D to handle this construction. D, in turn, agreed to indemnify Sun for any losses incident to the construction. D contracted with Williams-McWilliams (Williams), the vessel owner, for the use of a barge and crew in aid of its construction activities. D and Williams did not enter into any indemnity agreement. The barge's anchor fouled on an obstruction near the SLAM pipeline. The barge superintendent, Southon, ordered a 'dogging' technique to free it. It freed the anchor and also 'dislodged' a chunk of the SLAM pipeline. SLAM production operations were interrupted and substantial repairs required. Everybody got involved in the suit. The judge made the following conclusions: (1) the negligence of the barge superintendent, for which Williams bore full responsibility, was the sole proximate cause of the accident; (2) Williams was consequently liable to SLAM in tort; (3) Sun was liable to SLAM on its contract of indemnity; (4) D was liable on its indemnity agreement to Sun; and (5) Williams was liable for tort indemnity to Sun and D. The district court found SLAM entitled to full recovery of its loss $ 1,116,234.62. The tortfeasor Williams, however, pursuant to 46 U.S.C. § 181 et seq., was entitled to limit its legal liability to the value of the barge, subsequently found by the district judge to be $ 450,000. The insurance carried by Williams in excess of its first $ 500,000 of coverage was held not subject to the Louisiana direct action statute. P turned to indemnitor Sun for relief and Sun to D. D was left liable for the difference. D appealed. It maintains that the district court erred (1) in allowing Williams to limit its liability for the results of this accident.