Cause No. 04-40230 (5th Cir. Feb. 9, 2005). Arsement v. Spinnaker Exploration Co., L.L.C., et. al.

The Fifth Circuit Court of Appeals holds that a platform owner can rely on Chapter 95 of the Texas Civil Practice & Remedies Code for the first time in its post-trial motion as to a plaintiff’s claims for premises liability.

Dalton Arsement, an employee of Production Hook-Up Services (“PHS”), was injured on his second day of work during the installation of a sump deck on a fixed platform located in the Gulf of Mexico off of the Texas coast. Spinnaker Exploration Co., L.L.C. (“Spinnaker”), owner and operator of the fixed platform, hired PHS to refurbish certain parts of the platform. In addition to PHS, Spinnaker hired Nova Consulting Services (“Nova”) to identify the need for refurbishments on the platform. Nova, in turn, hired White Wing Consultants (“White Wing”) to inspect the refurbished project for safety and contract compliance.

As a result of his injuries, Arsement filed suit against Spinnaker, White Wing and three Nova entities in the district court for the Southern District of Texas. All parties agreed that Texas law governed as the case was a Texas situs Outer Continental Shelf Lands Act (“OCSLA”) action. At the close of Arsement’s case in chief at trial, each defendant moved for a judgment as a matter of law that they were not liable for Arsement’s injuries pursuant to Rule 50(a)(1) of the Federal Rules of Civil Procedure. The district court denied the motions. During the jury charge conference, the district court refused to submit Defendants’ sole proximate cause instruction, which attributed all causation for Arsement’s injuries to PHS. Defendants renewed their judgment as a matter of law during jury deliberations, and the motions were again denied. The jury assessed 7% fault to Arsement, with the remainder split equally among the defendants, or each 31% liable.

The district court entered final judgment on January 27, 2004, and the Defendants moved for judgment as a matter of law pursuant to Rule 50(b) on February 10, 2004. In its post-trial motion for judgment as a matter of law, Spinnaker invoked Chapter 95 of the Texas Civil Practice & Remedies Code for the first time, asserting that Arsement failed to present sufficient evidence for liability against Spinnaker under the Chapter. The remaining defendants asserted that Arsement failed to prove common-law liability against them. The district court denied the Defendants’ motions and the Defendants appealed.

Prior to 1996, Texas common law controlled premises liability claims by an employee of an independent contractor injured while working for either a premises owner or a contractor. Pursuant to Redinger v. Living, Inc., 689 S.W.2d 415, 417 (Tex. 1985), a property owner or contractor is liable for negligent activity “only if it controlled the independent contractor’s methods of work and failed to take reasonable care for such control.” For a plaintiff to trigger liability against a defendant under Redinger, the level of control exercised must be “more than a general right to order the work to start or stop, to inspect progress, or receive reports.” Redinger, 689 S.W.2d at 417. The Texas Supreme Court further held that “an employer who gives on-site orders or provides detailed instructions on the means or methods to carry out a work order owes the independent contractor employee a duty of reasonable care to protect him from work-related hazards.” See Hoechst-Celanese Corp. v. Mendez, 967 S.W.2d 354, 357 (Tex. 1998).

In 1996, the Texas legislature enacted Chapter 95 of the Texas Civil Practice & Remedies Code to provide greater protection to property owners against premises liability claims. Similar to Texas common law, Chapter 95 provides that property owners are not liable for injuries to employees of independent contractors working on the owner’s real property, or improvements to such property, unless the property owner exercises “control over the manner in which the work is performed.” See TEX. CIV. PRAC. & REM. CODE § 95.003(1) (Vernon 2004). Chapter 95, however, further protects a premises owner by also requiring that he have “actual knowledge of the danger … resulting in personal injury” and “fails to adequately warn” of that danger. See id. at § 95.003(2). Under Chapter 95, operators of offshore oil and gas platforms, such as Spinnaker, are considered owners. See Francis v. Coastal Oil & Gas Corp., 130 S.W.3d 76, 84 (Tex. App.—Houston [1st Dist.] 2003, no pet.).

It was undisputed that Spinnaker owned and operated the platform where Arsement sustained his injuries or that Texas law applied pursuant to OCSLA, 43 U.S.C. § 1349. Arsement responded to Spinnaker’s post-trial motion for judgment as a matter of law, arguing that Spinnaker could not invoke Chapter 95 because it failed to raise the Chapter before final judgment. The Fifth Circuit disagreed.

Although Spinnaker did not expressly cite Chapter 95 in its pre-trial order, the Fifth Circuit recognized that all of its elements were present. Specifically, the pre-trial order addressed all three elements necessary under Chapter 95: control, knowledge, and failure to warn. The court noted that a plain reading of Chapter 95 indicates that it does not require an affirmative pleading. To the contrary, Chapter 95 applies to claims “for damages caused by negligence” against premises owners who “own property primarily used for commercial or business purposes.” See TEX. CIV. PRAC. & REM. CODE § 95.001. In addition, the Fifth Circuit recognized that Texas courts have consistently held that Chapter 95 is the exclusive remedy for negligence claims brought against premises owners. See Dyall v. Simpson Pasadena Paper Co., 2003 WL 21664163 (Tex. App.—Houston [14th Dist.] July 17, 2003, reh’g pending). The court also stated that although Spinnaker did not cite to Chapter 95 prior to its post-trial motion, “several of its elements – notably control and actual knowledge – are also present for common-law liability and underlay the whole trial.” Thus, the Fifth Circuit held that Chapter 95 was the “controlling law” for Arsement’s claims against Spinnaker and employed the elements of Chapter 95 in its de novo review of Spinnaker’s post-trial motion for judgment as a matter of law.

In its review of the trial record, the Fifth Circuit stated that Chapter 95 provides that premises owners “are not liable for ‘personal injury [claims by] … an employee of a … subcontractor who constructs, repairs, renovates, or modifies an improvement to real property … arising from the failure to provide a safe workplace.’” (quoting TEX. CIV. PRAC. & REM. CODE § 95.003). Further, the court stated that Chapter 95 applies to all claims for “damages caused by negligence” arising from “the condition or use of an improvement to real property where the contractor or subcontractor constructs, repairs, renovates, or modifies the improvement.” See id. at §§ 95.001, 95.002. As such, the Fifth circuit concluded that Chapter 95 applies to premises defect claims and negligent activity claims like those asserted by Arsement. See Francis, 130 S.W.3d at 84; Fisher v. Lee and Change P’ship, 16 S.W.3d 198, 202 (Tex. App.—Houston [1st Dist.] 2000, pet. denied).

Applying Chapter 95, the Fifth Circuit recited the test for liability. First, the property owner must “exercise or retain some control over the manner in which the work is performed, other than the right to order the work to start or stop or to inspect progress or receive reports.” The Fifth Circuit recognized that the “control” factor is narrowly construed by Texas courts, the “owner must control the mode or method of the contractor’s work.” See Dyall, 2003 WL 21664163, at *5. Second, the property owner must have “actual knowledge of the danger or condition resulting in the personal injury;” and it must have “failed to adequately warn” of this danger. TEX. CIV. PRAC. & REM. CODE § 95.003(1), (2). Applying this test to the evidence presented by Arsement at trial, the Fifth Circuit held that there was insufficient evidence for a reasonable jury to find Spinnaker had the requisite actual knowledge of the danger resulting in Arsement’s injury.

The Fifth Circuit then noted that although Chapter 95 applied to Arsement’s claims against Spinnaker, Chapter 95 did not apply to claims against general or independent contractors, such as the remaining defendants. Texas common law, and not Chapter 95, controlled as to liability against White Wing and Nova. Pursuant to Texas common law, the Fifth Circuit stated that a contractor does not assume liability for another’s injury under a theory of negligent activity premises liability unless that contractor has “control over, and responsibility for, the premises.” See Villegas v. Texas Dep’t of Transp., et. al., 120 S.W.3d 26, 38 (Tex. App.—San Antonio 2003, pet. denied). Only if an independent contractor is in control of the premises is he charged with the same duty as a premises owner or possessor. See id. The Fifth Circuit concluded that to prove liability against an independent contractor under Texas common law, the plaintiff must prove the contractor had (1) “some control” over the employee’s work and (2) failed to exercise reasonable care in its supervision. See Thomas v. Internorth, Inc., 790 F.2d 1253, 1254 (5th Cir. 1986). Based on the trial record, the Fifth Circuit held that Arsement failed to introduce any evidence upon which a reasonable jury could conclude that any of the remaining defendants were liable for his injuries. Thus, the Fifth Circuit vacated the district court’s denial of judgment as a matter of law for defendants and rendered judgment in their favor.