• Vessel Overhauls & The Jones Act
  • July 25, 2017 | Author: Christopher K. Ulfers
  • Law Firm: Jones Walker LLP - New Orleans Office
  • On June 16, 2017, the Texas Supreme Court issued its much-anticipated decision in Helix Energy Solutions Group, Inc. v. Kelvin Gold, confronting whether an individual hired to assist with the overhaul of a vessel, who was subsequently injured in the performance of his duties, qualified as a seaman under the Jones Act. Concluding in the negative, the Texas Supreme Court reaffirmed the general principle that major overhauls that render watercraft practically incapable of maritime transportation are sufficient to remove those crafts from "vessel in navigation" status under the Jones Act.

    The facts of the case were as follows. In August 2012, Helix Energy Solutions Group ("Helix") purchased the HELIX 534 (the "534"), a DP 2 Drill Ship MODU, for $85,000,000. After confecting the purchase, Helix had the 534 towed to Singapore, where she was dry-docked and converted to a well-intervention vessel. The conversion process was extensive, as it involved removing obsolete equipment, configuring and installing well-intervention equipment, and overhauling the engines, thrusters, generators, and in-line propulsion equipment. As the Texas Supreme Court recognized, overhauling the engines and other propulsion equipment rendered the 534 unable to navigate on her own for a substantial portion of the conversion process.

    In November 2012, during the lengthy conversion process, Helix hired Kelvin Gold as an "able-bodied seaman," anticipating that Gold would eventually serve as an offshore worker. As such, Gold was initially tasked with familiarizing himself with the 534 and assisting with the overhaul, including the performance of miscellaneous duties such as painting, cleaning, taking inventory, etc. In December 2012 and April 2013, Gold was allegedly injured while assisting with the overhaul. Gold filed suit, and Helix contested whether Gold was a seaman.

    The trial court agreed with Helix, granting its motion for summary judgment on the basis that Gold was not a Jones Act seaman because the 534, while undergoing a major overhaul, was not a "vessel in navigation" as defined by the Jones Act. An intermediate Texas appellate court, however, reversed the trial court's ruling, finding that genuine issues of material fact existed with respect to whether the 534 was a vessel in navigation at the time of Gold's injury. Despite the fact that the 534 was undergoing an extensive overhaul in dry-dock when Gold was injured, the appellate court ruled that "[a] reasonable fact-finder could determine, based on the Helix 534's physical characteristics and activities, that the ship was designed to a practical degree for carrying people or things over water, and the Helix 534's use as a means of transportation on water was a practical possibility."

    The appellate court's ruling left some uncertainty within the industry as to the proper scope and application of the Jones Act in Texas state courts. Prior to the appellate court's ruling, it was generally understood that the Jones Act does not apply to a vessel that is taken out of navigation for an extended period of time, as such a vessel is not practically capable of maritime transportation. Any uncertainty that existed following the appellate court's ruling, however, was short-lived.

    The Texas Supreme Court ultimately reversed the appellate court. Focusing on the extent of the overhaul, the Texas Supreme Court concluded that the 534 was not a vessel in navigation at any time during Gold's work and, therefore, that the Jones Act was inapplicable. In reaching this conclusion, the Texas Supreme Court noted that when Helix purchased the 534, she was laid-up out of the water and did not re-enter service as a vessel until after the overhaul was completed some 20 months later. The Court also noted that due to the extensive nature of the overhaul, which required the repair or replacement of the 534's propulsive equipment, the 534 was unable to self-navigate during the entirety of the overhaul and, more importantly, during the entirety of Gold's time aboard the vessel. Ultimately, the Court ruled that the status of the 534 before and after Helix's purchase of the vessel, the pattern of the repairs, and the extensive nature of the work contracted to be done placed the 534 decidedly in the category of vessels that lose "vessel in navigation" status while being overhauled.

    The Texas Supreme Court's decision in Helix Energy Solutions Group, Inc. v. Kelvin Gold is significant for vessel owners. The decision underscores the fact that the Jones Act likely does not apply to a vessel undergoing a major overhaul, assuming that the overhaul renders the vessel practically incapable of maritime transportation.