In re Complaint of Ensco Offshore Co.

990 F.Supp.2d 751

In the Matter of the Complaint of ENSCO OFFSHORE COMPANY, as Owner of the modu ENSCO 74 for Exoneration from or Limitation of Liability.

Civ. A. No. H–09–2838.

United States District Court,

S.D. Texas,

Houston Division.

Jan. 7, 2014.

Delos E. Flint, Jr., Jon Wesley Wise, Edward F. Lebreton, III, Lawrence Raymond Demarcay, III, Fowler Rodriguez et al., New Orleans, LA, Kim E. Conkey, Kim E. Conkey, Attorney At Law, League City, TX, for Plaintiff.

James Ordeneaux, Plauche Maselli Parkerson LLP, Edward S. Johnson, Johnson Johnson et al., G. Bruce Parkerson, Plauche Maselli et al, New Orleans, LA, for Defendant.

OPINION AND ORDER

MELINDA HARMON, District Judge.

Pending before the Court in the above referenced cause for exoneration from or limitation of liability, pursuant to 46 U.S.C. § 30501 et seq., civil and maritime, inter alia is Plaintiff Ensco Offshore Company's (“Ensco's”) motion for partial summary judgment declaring that the measure of the claim for economic loss by High Island Offshore System, LLC (“HIOS”) is a “no incident/incident” calculation, i.e., the difference between the present value of the revenue steam with no incident and the present value of the revenue stream with the incident (instrument # 96)

Background Facts

Ensco was the sole owner of the Ensco 74, a self-elevating drilling unit and a registered vessel of Panama, Official No. 8764420, approximately 74.0918 meters long and 62.788 meters wide, and a depth of 7.924 meters. On September 8, 2008 the Ensco 74 was located off the Coast of Louisiana in South Marsh 149 when Hurricane Ike approached. Ensco claims that it followed its hurricane procedures, made fast the rig, and evacuated all personnel. On September 12, 2009, the Ensco 74 was swept off its location, leaving only its legs on the site, and was destroyed by Hurricane Ike. The rig's barge was moved approximately 100 miles by the storm and sank sixty-five miles south of Galveston, Texas in High Island 241A.

On March 6, 2009 the M/V SATILLA allided with and was damaged by the remains of the ENSCO 74. At that time the Ensco 74 had been missing and considered lost for six months, despite efforts of Ensco, C & C Technologies, NOAA, the U.S. Coast Guard, and third parties to locate it. Ensco filed this action, and among the claimants who appeared and filed claims is HIOS (# 15 and 16).

HIOS asserts that the Ensco 74 struck and seriously damaged its pipeline that ran across the seabed of the Gulf of Mexico and was used to transport natural gas from offshore production facilities to shore. It claims that as a result of the damage, its pipeline was shut in for 104 days for repairs. HIOS claims that Ensco was negligent in failing to design, maintain, and prepare the Ensco 74 properly for hurricane conditions and to implement an appropriate search, was guilty of statutory violations rendering it negligent per se, and is not entitled to exoneration from or limitation of liability because it had direct privity and knowledge of the matters that were the direct and proximate cause of HIOS's damages, and that the Ensco 74 was unseaworthy. HIOS seeks damages against Ensco in personam and the Ensco 74 in rem in excess of $26,500,000.00 plus interest.

Standard of Review

Summary judgment under Federal Rule of Civil Procedure 56(c) is appropriate when “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is material if it might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute of material fact is “genuine” if the evidence would allow a reasonable jury to find in favor of the nonmovant. Id. The court must consider all evidence and draw all inferences from the factual record in the light most favorable to the nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d at 712–13.

The application of the rule depends upon which party bears the burden of proof at trial. If the movant bears the ultimate burden at trial, the movant must provide evidence to support each element of its claim and demonstrate the lack of a genuine issue of material fact regarding that claim. Rushing v. Kansas City S. Ry., 185 F.3d 496, 505 (5th Cir.1999), cert. denied,528 U.S. 1160, 120 S.Ct. 1171, 145 L.Ed.2d 1080 (2000).

If the nonmovant bears the burden of proof at trial, the movant may either offer evidence that undermines one or more of the essential elements of the nonmovant's claim or point out the absence of evidence supporting essential elements of the nonmovant's claim; the movant may, but is not required to, negate elements of the nonmovant's case to prevail on summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Lujan v. National Wildlife Federation, 497 U.S. 871, 885, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990); Edwards v. Your Credit, Inc., 148 F.3d 427, 431 (5th Cir.1998); International Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264 (5th Cir.1991); Saunders v. Michelin Tire Corp., 942 F.2d 299, 301 (5th Cir.19991).

If the movant meets this burden, the nonmovant must then present competent summary judgment evidence to support each of the essential elements of the claims on which it bears the burden of proof at trial and to demonstrate that there is a genuine issue of material fact for trial. National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d 698, 712 (5th Cir.1994). “[A] complete failure of proof concerning an essential element of the nonmoving party's case renders all other facts immaterial.” Celotex, 477 U.S. at 323, 106 S.Ct. 2548.

“ ‘[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment ....’ ” State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir.1990), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “Nor is the ‘mere scintilla of evidence’ sufficient; ‘there must be evidence on which the jury could reasonably find for the plaintiff.’ ” Id., quoting Liberty Lobby, 477 U.S. at 252, 106 S.Ct. 2505. The Fifth Circuit requires the nonmovant to submit “ ‘significant probative evidence.’ ” Id., quoting In re Municipal Bond Reporting Antitrust Litig., 672 F.2d 436, 440 (5th Cir.1982), and citing Fischbach & Moore, Inc. v. Cajun Electric Power Co-op., 799 F.2d 194, 197 (5th Cir.1986); National Ass'n of Gov't Employees v. City Pub. Serv. Board, 40 F.3d at 713. Conclusory statements are not competent evidence to defeat summary judgment. Turner v. Baylor Richardson Medical Center, 476 F.3d 337, 346–47 (5th Cir.2007) (plaintiff “must offer specific evidence refuting the factual allegations underlying [defendant's] reasons for her termination”), citing Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir.1992). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Thomas v. Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th Cir.1999), citing Celotex, 477 U.S. at 322, 106 S.Ct. 2548, and Liberty Lobby, 477 U.S. at 249–50, 106 S.Ct. 2505.

Ensco's Motion for Partial Summary Judgment (# 96)

Though denying any liability to HIOS, Ensco argues that if it is found liable, the proper measure of HIOS's claim for economic loss is no incident/incident. HIOS, analogizing to the measure standardly used for deferred production, contends that it is a traditional loss of use, i.e., alleged average daily lost revenue times the number of days of “deferred through put” of its pipeline. Ensco identifies the fundamental issue as how the Court accounts for the fact that the gas was still in the ground while the pipeline was shut in for repair. Ensco maintains that the evidence shows that HIOS did not lose its pipeline revenue because of any other producer's transporting the gas destined for the HIOS gas pipeline on some other pipeline. Instead the producers who used the damaged section of the HIOS pipeline simply shut in their own production facilities and wells until the HIOS pipeline was repaired and operating again. Ex. 3, Affid., and Ex. 4, report of Ensco's expert, Calvin C. Barnhill, applying a no incident/incident calculation.¹ The oil and gas remained in the ground until it could again be shipped through the HIOS pipeline. No product was lost, but only deferred for 104 days, and ultimately the same volume of gas has been or will be shipped through the pipeline. HIOS will earn income on the same quantity of through put as though the damaging incident had never occurred.²

Ensco cites a line of cases supporting its contention. In Continental Oil Co. v. The SS Electra, 431 F.2d 391 (1970), cert. denied,401 U.S. 937, 91 S.Ct. 925, 27 L.Ed.2d 216 (1971), a vessel struck a production platform in the Gulf of Mexico owned by the four plaintiff oil companies, and the resulting severe damage necessitated shutting in the wells connected to the platform for 130 days. Although the platform later suffered additional damages, the parties stipulated that 130 days would have been required to repair the damage done by the Electra. Plaintiffs sought economic loss in the amount of $60,000, which was the net income that would have been realized from the wells connected to the platform during the shut-in period. Faced with having to choose between net profits or interest on net profits as damages for a delay in production, the Fifth Circuit, althoughobserving that plaintiffs had not lost oil or gas, noted that the only evidence before it...