Maritime Update: Dismissal of Suit Against Designer/Builder of Floating Oil Platform Affirmed
On April 25, 2016, in the matter of Hefren v. McDermott, Inc., the U.S. Fifth Circuit Court of Appeals affirmed the dismissal of a personal injury claim against a designer/builder of an offshore drilling rig and production platform (the "Spar"). Designers and builders of immovables may be able to use this opinion to quickly defeat untimely faulty design and construction claims.
In March 2002, Murphy Exploration and Production Company, USA ("Murphy") contracted with McDermott, Inc. ("McDermott") for McDermott to design and construct the Front Runner Spar ("Front Runner"), an offshore facility for the removal and processing of petroleum from the seabed. In May 2004, Murphy accepted delivery of the Front Runner and affixed it to the Outer Continental Shelf ("OCS") adjacent to Louisiana.
On June 6, 2011, James Hefren, an employee of Murphy, was injured when a flange struck him in the face. Plaintiff brought a Jones Act suit against Murphy for its negligence and alleged that McDermott failed to properly design and construct the Front Runner. The suit was removed to federal court, and McDermott filed a motion to dismiss Hefren's claims.
McDermott argued that Hefren's claims were barred or preempted pursuant to Louisiana statutory law, which provides that no action arising out of deficiencies in the design or construction of immovable property can be brought more than five years after it is delivered. McDermott argued plaintiff's claims against it were perempted because Hefren's claims were brought in 2013 and Murphy took possession of the Spar in 2004.
Hefren maintained that the Front Runner was not immovable property because it was not attached to the seabed and its mooring system allowed it to be unmoored and transported. The district court granted McDermott's motion and dismissed Hefren's claims against McDermott. Plaintiff appealed.
The Fifth Circuit applied Louisiana law since the Front Runner was located on the OCS adjacent to Louisiana. Under Louisiana law, no action arising out of deficiencies in the design or construction of immovable property can be brought five years after the date when the property is accepted by the owner. The Court held that the peremptive statute destroyed plaintiff's previously existing rights.
The Fifth Circuit held that the Front Runner was immovable property and Hefren's claims against McDermott were extinguished because suit was initiated against the designer/builder more than five years after the Spar was accepted by its owner.
E. Why is This Important?
- A work platform in Louisiana or on the OCS off the coast of Louisiana that remains in a specific location for the foreseeable future and is permanently moored such that its movement will be difficult and expensive is likely immovable property, and the five year peremptive period in La. R.S. 9:2772 for actions involving deficiencies in design and construction of immovables should apply.
- In Louisiana, structures that are permanently moored (such as a sunken barge with above-water living quarters, offices, storage, etc.) are immovable property such that an action for deficiencies in design and/or construction must be brought within five years of acceptance by the owner.
- Owners of such fixed platforms must act within the five-year peremptive period to preserve a claim for deficiencies in design and/or construction. This is a shorter limitation period than the ten-year prescriptive period applicable to contract claims.