Opinion
Civil Action No. 99-3083 Section "C" (1)
September 22, 2000
ORDER AND REASONS
On August 30, 2000, the Court requested Supplemental Briefs from the parties regarding the Cross-Motion for Partial Summary Judgment filed by The Meridian Resource Exploration Company ("Meridian"). After considering the submissions of the parties, the record and the relevant law, the Court hereby GRANTS Meridian's Cross-Motion for Partial Summary Judgment.
I. Factual Background
Nabors Offshore Corp. ("Nabors") contracted with Meridian to perform workover operations on a well located in the Gulf of Mexico off the coast of Louisiana on or about December 15, 1998. In the course of performing this contract, Nabors' rig sustained hull damage as a result of contact with the sea floor. The parties agree that paragraph 606 of the contract between Nabors and Meridian controls their obligations with respect to the drilling site and access thereto. According to the Contract, Meridian is responsible for all damage resulting from "structural deficiencies at or within the area of the Drill Site." The parties now come before this Court and offer two alternative definitions of the word "structural." Meridian posits that "structural" only covers man-made objects, while Nabors insists that "structural" encompasses all structural obstacles, including naturally occurring obstacles present on the sea floor.
The contract, to which Nabors is the successor in interest, was actually between Meridian and Sundowner Offshore Services, Inc. and Sundowner Inland Services, Inc. ("Sundowner").
Paragraph 606 reads in relevant part:
Notwithstanding any other provision of this Contract, should there be structural deficiencies at or within the area of the Drill Site, including the platform deck or appurtenances, and these deficiencies damage Contractor's Items, or Contractors Items damage the structure. or if structures prove unsatisfactory to properly support the Drilling Unit during operations hereunder, Operator will be responsible for and hold harmless and indemnify Contractor for all resulting damage. .
In resolving this dispute, the Court must engage in a step-by-step analysis of the contract. First, this Court must inquire whether the contract between Nabors and Meridian is ambiguous. This inquiry is a matter of law reserved to the judge.See Louisiana Land Exploration v. Offshore Tugs. Inc., 23 F.3d 967, 969 (5th Cir. 1994). A contract term is ambiguous "if it is susceptible to more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business."Bloom v. Hearst Entertainment. Inc., 33 F.3d 518, 522 (5th Cir. 1994) (internal quotations and citations omitted). A court must look solely at the language of the contract to determine whether or not it is ambiguous; extrinsic evidence should only be considered after the contract has been found to be ambiguous. See id. Once a contract is determined to be ambiguous, factual disputes about the meaning of the contract may be submitted to a jury. See Ham Marine, Inc. v. Dresser Indus., Inc., 72 F.3d 454, 458-9 (5th Cir. 1995) (quoting Watkins v. Petro-Search. Inc., 689 F.2d 537, 538 (5th Cir. 1982)). Where a maritime contract is involved, however, the Court and not the jury should interpret the contract. See Durden v. Exxon Corp., 803 F.2d 845, 849-50 (5th Cir. 1986); Fed.R.Civ.P. 9 (h), 38(e).
The Fifth Circuit noted one exception to this general rule under the Uniform Commercial Code: extrinsic evidence may be introduced to demonstrate that a contract term is not ambiguous in light of usage of trade, course of dealing or course of performance. See Bloom, 33 F.3d at 522.
Because the Court finds the contract not to be ambiguous, nothing turns on whether the contract is construed as a maritime contract, and therefore the Court does not express a view on the issue.
II. Liability Under Paragraph 606 of the Contract
In this case, it is clear to the Court that the contract is not ambiguous, and there is no specific trade usage of the word "structural" that would cause the Court to believe that anything other than the common sense English definition of the word should control. A structure is "something constructed or built," Webster's Third Int'l Dictionary (1966), or "any construction, or any production or piece of work artificially built up or composed of parts joined together in some definite manner . . . an edifice or building of any kind." Black's Law Dictionary (2d ed., 1990). This Court has not found a single case where the meaning of the term "structure" has been extended to include naturally occurring elements of the sea floor. The language of the paragraph itself suggests that the parties had artificial edifices in mind — "including the platform deck or appurtenances." Likewise, neither party has offered evidence to the Court to suggest that there is a technical meaning of the term "structural" specific to the trade. Therefore, the Court finds that the contract is not ambiguous and accepts the definition of "structural" offered by Meridian to include only artificial (i.e., humanly constructed) structures.
Even if there were some room for doubt about the meaning of the term structural, the Restatement provides that "[i]n choosing among the reasonable meanings of a promise or agreement or a term thereof, that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds." Restatement of Contracts 2d § 206. Neither the plaintiff nor the defendant in this dispute is an amateur with regard to drafting these contracts. The Court also finds it noteworthy that other players in the industry have provided for the contingency (i.e., faulty seabed conditions) involved in this litigation. See Louisiana Land Exploration Co. v. Offshore Tugs. Inc., 1993 WL 732429 (E.D. La. 1993), aff'd 23 F.3d 967 (5th Cir. 1994). However, in the Court's opinion, the meaning of the term "structural" is clear, as are the liabilities that flow from this provision.
Nabors also argues that the Court's reading of the word "structural" is not dispositive with regard to Meridian's liability for damage caused by the seabed. See Supplemental Mem. in Support of Nabors' Opposition to Meridian's Cross-Motion for Partial Summary Judgment at 3. Nabors' insists that another provision of Paragraph 606 results in liability for Meridian: "Operator will also provide Contractor with adequate information about Operator's location so that Contractor can prepare a rig arrangement drawing and provide Operator with rig loadings scenarios as may be required by Operator to ensure the integrity of the location." This provision appears only to require Meridian provide "adequate information" about the site, and does not place any additional affirmative duties on Meridian to investigate the stability of the seabed floor. Looking at the record, it appears to the Court that Meridian offered adequate information about the site, including water depth surveys, and engaged in other conversations with Nabors' officials about such matters. Nabors, however, would use this section of Paragraph 606 to encompass the type of damage that the other provision of the paragraph excluded. However, the language and the context of this provision will not, in the Court's opinion, sustain such a reading.
Finally, the Court notes that this Paragraph pertains to damage caused "at or within the area of the Drill Site." However, in other pleadings, Nabors has represented to this Court that it was never able to access the Drill Site, a factual point which Meridian does not dispute. For this additional reason, the Court finds that the exceptions contained in Paragraph 606 do not apply to the events involved in this litigation.
III. Conclusion
In drafting this contract, Nabors' predecessor, Sundowner, understandably did not take into account every possible contingency. Unfortunately for Nabors, however, they did not provide for the possibility that the seabed floor would cause damage to its property. In hindsight, Nabors clearly wishes that it had, but that is insufficient reason for this Court to stretch unduly the boundaries of the English language.
See supra note 1.
For this reason, the Meridian's cross-motion for partial summary judgment is hereby GRANTED and Nabors' property damage claim against Meridian is DISMISSED.