American Offshore Workover, Inc., Plaintiff-appellee, v. the Dow Chemical Company, Inc., Defendant-appellant, 477 F.2d 880 (5th Cir. 1973)

Defendant-appellant Dowell, a division of The Dow Chemical Company, (Dowell) was preparing to diversify its business to include the stimulation of old oil and gas wells (workover) in the Gulf of Mexico. It leased from plaintiff-appellee American Offshore Workover, Inc., (AOW) the vessel "Mr. Don" to be used as a mobile platform for servicing the wells in its offshore workover operations. The term of the lease was for three years and AOW was aware of the purpose for which Dowell had leased the vessel.

Dowell used the vessel for one year in the western Gulf area without complaint, but when it attempted to move further eastward it was advised by AOW for the first time that such area was outside of the navigational capabilities of the "Mr. Don". Because the navigational limits of the vessel precluded Dowell from working what it regarded as its prime workover market area, and AOW refused to modify the vessel to enable it to work the desired area, Dowell terminated the contract. AOW successfully sued for breach in the court below. We affirm.

The "Mr. Don" was a self-propelled, self-elevating, mat-supported vessel, which meant it jacked up out of the water by supporting its weight on four legs that were attached to a mat which in turn rested on the bottom subsoil of the sea. The ability of such a vessel to support its weight on the bottom depended largely on the consistency of the sub-soil; soft-bottom areas usually failed to provide the requisite support and greatly added to the danger of the vessel's turning over.

The question whether Dowell was justified in terminating its contract with AOW is answered by examining the correspondence AOW sent Dowell informing the latter of the "Mr. Don" 's limitations. We approve the district court finding that such correspondence consisted simply of recommended safety practices because of erratic soil changes on the sea-bottom subject to modification as the situation changed. We reject Dowell's contentions here as in the court below that it was ordered by the letters to eliminate completely a whole important market area without justifiable cause, and was hence justified in terminating the contract.

The full texts of the two letters AOW sent Dowell are reproduced in the margin.¹  At the onset of the first letter AOW expressly put Dowell on notice that the instructions to follow were subject to change. The letter was equally clear that the limitations imposed on the vessel were made in view of its self-elevating, mat-supported nature and the danger inhering in working in areas with "underconsolidated or very recent clay bottoms". Indeed, a rather elaborate and cautious empirical "on location" test was ordered to "check bottom conditions to ascertain that sufficient bearing surface exists" to support the vessel. In short, there was no absolute prohibition against work in any area, but no more than a requirement that the sea-bottom be tested to ensure the safety of the vessel and her crew. The district court's holding was supported by the record, Washington Aluminum Company v. Pittman Construction Company, 5 Cir. 1967, 383 F.2d 798, 804.

We do not discern merit in Dowell's other contentions, including its attack on the method of computation and amount of damages allowed for the breach of contract.

Affirmed.