Opinion
Civil Action No. 04-3229 Section "F".
January 26, 2005
ORDER AND REASONS
Before the Court is the plaintiff's motion to remand. For the reasons that follow, the motion is GRANTED.
Background
The plaintiff contracted with J. Ray McDermott, Inc. to construct the topsides of a floating oil and gas production facility called the Front Runner. The plaintiff built the topsides in Houma and then transported it to the Front Runner's offshore location, where the Front Runner was performing exploration, development, and production operations on the Outer Continental Shelf ("OCS").
The plaintiff sued in state court, asserting that the defendant was refusing to pay over five million dollars that it still owed the plaintiff under the contract to build the topsides. The defendant removed the case, citing federal question jurisdiction under the Outer Continental Shelf Lands Act ("OCSLA"), 43 U.S.C. §§ 1333(a) and 1349(b)(1).
The plaintiff now seeks remand of the case.
I.
Although the plaintiffs challenge removal in this case, the removing defendants carry the burden of showing the propriety of this Court's removal jurisdiction. See Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir.), cert. denied, 510 U.S. 868, 114 S. Ct. 192, 126 L.Ed.2d 150 (1993); Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). In addition, any ambiguities are construed against removal, Butler v. Polk, 592 F.2d 1293, 1296 (5th Cir. 1979), as the removal statute should be strictly construed in favor of remand. York v. Horizon Fed. Sav. and Loan Ass'n, 712 F. Supp. 85, 87 (E.D. La. 1989); see also Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100 (1941).
II.
The breach of contract involved in this case does not fall under OCSLA, and the Court therefore does not have jurisdiction.
Under OCSLA,
the district courts of the United States shall have jurisdiction of cases and controversies arising out of, or in connection with (A) any operation conducted on the outer Continental Shelf which involves exploration, development, or production of the minerals, of the subsoil and seabed of the outer Continental Shelf, or which involves rights to such minerals.43 U.S.C. § 1349(b). OCSLA ensures that the law applied to the OCS is federal law, see EP Operating Ltd. P'ship v. Placid Oil Co., 26 F.3d 563, 566 (5th Cir. 1994), and is "intended `to govern the full range of potential legal problems that might arise in connection with operations on the Outer Continental Shelf.'" Id. at 569 (quoting Laredo Offshore Constructors, Inc. v. Hunt Oil Co., 754 F.2d 1223, 1228 (5th Cir. 1985)), with the "primary purpose [being] `the efficient exploitation of the minerals of the OCS, owned exclusively by the United States.'" Id. at 570 (quoting Amoco Prod. Co. v. Sea Robin Pipeline Co., 844 F.2d 1202, 1210 (5th Cir. 1988)). Therefore, "any dispute that alters the progress of production activities on the OCS and thus threatens to impair the total recovery of the federally-owned minerals was intended by Congress to come within the jurisdictional grant of [OCSLA]." Id.
OCSLA has been applied to contractual disputes that are "intimately connected with an operation on the Outer Continental Shelf which involved the exploration, development, or production of subsurface resources."Laredo, 754 F.2d at 1229; see also Sea Robin, 844 F.2d at 1203, 1210 (take-or-pay contracts in which one of the parties bought less gas than the contracts contemplated fell within OCSLA's jurisdiction).
A contract involving the construction of a platform has been found to arise under OCSLA. See Laredo, 754 F.2d at 1229. However, the facts inLaredo are distinguishable from this case in important ways. In Laredo, construction of the platform actually took place on the OCS. See id. at 1225. Construction of the topsides in this case took place in Houma, Louisiana. More importantly, however, Laredo involved an unfinished platform. The Laredo court describes the dispute as "arising out of the allegedly improper partial construction of a fixed platform." Id. at 1229. The construction company in Laredo was dismissed from the site before the platform was completed. Id. at 1225. Since the platform was only partially constructed, the efficient exploitation of OCS minerals was thwarted. See id. at 1229.
The complaint in this case asserts that Gulf Island completed all obligations that the contract required. McDermott contends that Gulf Island has not completed its obligations. However, a case "cannot be made removable by any statement in the petition for removal or in subsequent pleadings by the defendant," Sanchez v. Trs. of the Pension Plan, Health Welfare Plan, Educ. Fund of the United Ass'n of Journeymen Carpenters of the Plumbing Pipefitting Indus. of the United States and Can., Local Union 198, AFL-CIO, 419 F. Supp. 909, 911 (M.D. La. 1976) (quoting Great N.R.R. Co. v. Alexander, 246 U.S. 276, 281 (1918)). The federal issue must arise on the face of the complaint. See, e.g., Medina v. Ramsey Steel Co., Inc., 238 F.3d 674, 680 (5th Cir. 2001).
The face of this complaint concerns a completed contract similar to the ones in which OCSLA jurisdiction has been denied. NCX Co., LLC v. Samedan Oil Corp., No. Civ.A. 03-3284, 2004 WL 203079 (E.D. La. Jan. 28, 2004), involved a contract in which the services had been performed and the performing party was seeking payment for the services it had rendered. See id. at *3. The Court found
that the present dispute does not affect the flow of production or development, nor does it affect the efficient exploitation of natural resources in the OCS. It is simply a breach of contract claim which does not implicate the interest expressed by Congress in the efficient exploitation of natural resources of the OCS.Id. Likewise, the court declined to exercise OCSLA jurisdiction inBrooklyn Union Exploration Co., Inc. v. Tejas Power Corp., 930 F. Supp. 289 (S.D. Tex. 1996), finding "that the substantive issues governing the outcome of this dispute have nothing to do with the OCS or the expressed congressional interest in its resources." Id. at 292. The dispute in Brooklyn Union arose over whether recalculation provisions were triggered in a contract involving the purchase of gas. See id. at 289.
Courts have applied a but-for test to establish OSCLA jurisdiction.See Tenn. Gas Pipeline v. Houston Cas. Ins. Co., 87 F.3d 150, 155 (5th Cir. 1996). The but-for test in this case weighs against OCSLA jurisdiction. In Tennessee Gas, a vessel collided with a platform affixed to the OCS. See id. at 152. If the platform had not been affixed to the OCS, no accident would have occurred. See id. at 155. In this case, the fact that the topsides was used on the OCS is irrelevant to the breach of contract cause of action asserted on the face of the plaintiff's complaint.
Gulf Island's lien claim under the Louisiana Oil Well Lien Act ("LOWLA") also does not supply OCSLA jurisdiction. Gulf Island's LOWLA lien seeks to encumber proceeds from OCS mineral production. It does not, however, interfere with OCS mineral production. In Harris Trust Sav. Bank v. Energy Assets Int'l Corp., 124 F.R.D. 115 (E.D. La. 1989), there was no OCSLA jurisdiction over "a priority dispute between the holders of the mortgage covering the [oil and gas] leases and the assignees of the [oil and gas] leases." Id. at 119. Similarly, Gulf Island is seeking a right to the proceeds of the OCS site. See id. at 116. This is not a case where further development of the OCS is being hindered by Gulf Island's LOWLA lien on proceeds. See British Borneo Exploration, Inc. v. Enserch Exploration, Inc., 28 F. Supp. 2d 999, 1005 (E.D. La. 1998).
"The Fifth Circuit has opined that there is [OCSLA] jurisdiction . . . only where the case at issue would `affect the efficient exploitation of resources from the OCS and/or threaten the total recovery of federally-owned resources.'" Sea Robin Pipeline Co. v. New Medico Head Clinic Facility, Civ. A. No. 94-1450, 1996 WL 84441, at *1 (E.D. La. Feb. 26, 1996). The breach of contract over completed topsides that is set forth in Gulf Island's complaint will neither affect work on the OCS nor threaten the recovery of resources from the OCS.
Accordingly, the plaintiff's motion to remand is GRANTED.