Ingram Corp. v. J. Ray McDermott & Co., Inc.

• Decision Date: 28 February 1983
• Docket Number: No. 82-3119,82-3119
• Citation: 698 F.2d 1295
• Parties: , 1983-1 Trade Cases 65,241 INGRAM CORPORATION and Ingram Contractors, Inc., Plaintiffs-Appellees, v. J. RAY McDERMOTT & CO., INC., Oceanic Contractors, Inc., Charles L. Graves, Robert K. Richie and James E. Cunningham, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1295

698 F.2d 1295

76 A.L.R.Fed. 1, 1983-1 Trade Cases 65,241

INGRAM CORPORATION and Ingram Contractors, Inc., Plaintiffs-Appellees, v. J. RAY McDERMOTT & CO., INC., Oceanic Contractors, Inc. Charles L. Graves, Robert K. Richie and James E Cunningham, Defendants-Appellants.

No. 82-3119.

United States Court of Appeals Fifth Circuit.

Feb. 28, 1983.

Denis McInerney, Michael P. Tierney, New York City, Harry A. Rosenberg, New Orleans, La., for McDermott.

Patricia Ann Pickrel, New York City, for Robert Richie.

Martin Minsker, Washington, D.C., Monroe & Lemman, William J. Hamlin, New Orleans, La., for plaintiffs-appellees.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before CLARK, Chief Judge, BROWN and POLITZ, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

The antitrust defendants in this interlocutory appeal, allowed under 28 U.S.C. Sec. 1292(b), seek to have this Court review the refusal of the District Court to grant summary judgment in their favor on the plaintiffs' ¹ state ² and federal ³ antitrust and RICO ⁴ claims. As a defense to the antitrust suit, the defendants assert the validity of two general releases executed by the plaintiffs in favor of defendants. The antitrust plaintiffs counter with the defense that these releases are vitiated due to defendants' fraudulent concealment of an antitrust conspiracy. The District Court refused to give effect to the releases based on the plaintiffs fraudulent concealment defense and thereby declined to dispose of the case through the summary judgment method. We conclude, as a matter of law, that the District Court erred in its failure to give effect to the general releases as a proper defense to the plaintiffs' claims. We therefore reverse.

Plaintiffs-appellees, Ingram Corporation and Ingram Contractors, Inc. ("Ingram") brought this suit against defendants-appellants, ⁵ McDermott, Inc. (formerly J. Ray McDermott & Co., Inc.), its subsidiary McDermott International, Inc. (formerly Oceanic Contractors, Inc.), and certain other

                named McDermott corporation executives and directors. 6   Ingram alleges a number of antitrust and RICO violations and contract impairments in its four Count, 64 paragraph original complaint and three Count, 28 paragraph amended complaint.  In addition to citing numerous violations of federal laws, 7 and Louisiana antitrust statutes, 8 Ingram asserts that the general releases involved in this dispute are ineffectual because of McDermott's fraudulent concealment of an antitrust conspiracy.  Because of our disposition of this case and the narrow issue considered, we have not been concerned with the substance of the dispute.  Thus, our recasting of the facts concerns only the validity of the releases, not the underlying merits of Ingram's antitrust suit
                

I. Facts

A. Basic Ingredients for an Antitrust Suit

Ingram's initial foray into the marine construction business was in 1964. It began rather modestly with only two small barges as equipment, which had been purchased from a small marsh dredging company then in receivership. But by 1970, according to its own claims, Ingram had become the third largest marine construction and contracting firm in the world. Thus, although starting modestly, within a few years Ingram came to be of similar ilk as its worldwide competitors--McDermott and Brown & Root. Just one year prior to achieving this exalted status in the marine construction world, Ingram asserts that McDermott and Brown & Root undertook to curtail, if not eliminate, its participation in the industry. Ingram claims that these defendants engaged in a bid-rigging conspiracy designed to make it a major statistic on the ledger of bankrupt marine construction businesses in 1970. They are alleged to have done this by submitting fixed and inflated bids in parts of the world where Ingram did not have equipment and personnel located to enable them to compete. Conversely, they are alleged to have submitted artificially low bids in those parts of the world where Ingram found it lucrative to compete. In a phrase, this allegation amounts to conspiratorial collusive bidding between the defendants.

Such collusive bidding practices forced Ingram into a business dilemma: (i) if it submitted bids higher than its competitors, it would surely not be awarded the work contract; (ii) if it chose to submit bids it would have to do so at ruinously low rates in order to be awarded the marine construction contract; (iii) if it chose not to submit bids, it could no longer be considered a functional competitor in the marine construction industry. Ingram chose the middle road.

Furthermore, Ingram complains that there was no part of the marine construction industry that these defendants did not seek to control and monopolize. The conspiracy between the defendants covered both domestic and foreign marine construction work. The defendants divided between themselves, on an equal dollar volume basis, projects that had the potential to be collusively bid. The defendants kept track of this information by keeping "score cards." These "score cards" recorded past bid-rigging projects and their dollar volume.

Ingram contends, moreover, that the antitrust conspiracy involved activities besides bid-rigging. The conspiracy touched on day rates charged for short term work. It involved The result, Ingram alleges, was that this forced them into a position of having to sell their assets or face sure insolvency by late 1971. Because of its poor financial predicament, Ingram decided to retreat from the industry by selling all of its assets in the marine construction industry. On November 19, 1971 Ingram entered into a series of contracts with McDermott who paid approximately $42 million to acquire Ingram's assets and take over Ingram's then existing contractual obligations to its customers.

agreements between the defendants not to compete with each other in certain geographic areas of the world, and agreements not to compete for work let them by certain "reserved" customers. In addition, the conspiracy included efforts by the defendants at sundry times to agree to and enforce standard terms in the contracts which they offered to their customers. Essentially, Ingram alleges that there was no part of the marine construction business which was unaffected by the conspiracy.

B. Add a Release for Flavor

Within a short time after this deal was closed, numerous contract disputes arose between the two parties concerning the completion of Ingram's unfinished construction work at the time of the sale as well as other matters relating to Ingram's withdrawal from the marine construction business. These disputes, which surfaced at least as early as February of 1972, involved claims by McDermott that there were substantial breaches of the warranties of title made with respect to certain of the assets transferred (principally relating to a half interest in a derrick barge which had been jointly owned by Ingram and an Italian company), and a claim of Ingram that the purchase price stated in the Purchase Agreement had not been computed properly and should therefore be increased by approximately half a million dollars. Other disputes quickly developed. Among other things, Ingram refused to make payments called for by the Subcontract Agreement, asserting that certain costs charged by McDermott were not job costs under the Subcontract Agreement or were excessive because of inefficiencies in McDermott's performance of the work. Claims in excess of $11 million were asserted by McDermott against Ingram, which in turn asserted some $1 million in claims against McDermott.

The disputes were complex, involving a wide variety of legal and factual issues, and there were numerous meetings and extensive correspondence between the parties in an effort to define and resolve the disputes. Settlement negotiations proceeded for over a year and a half. ⁹ It is significant to mention that at all times during these rather protracted negotiations the interests of both Ingram and McDermott were being closely guarded by a cadre of lawyers from throughout the country, including major urban areas like Nashville, New Orleans, and New York.

Finally, on May 2, 1973, a settlement agreement was reached in which Ingram offered to pay McDermott a sum in excess of $1.2 million with an exchange of releases. ¹⁰ McDermott accepted. The settlement

                agreement was executed to "settle all claims" between the parties "in connection with the Purchase Agreement and the Subcontract Agreement" (i.e., the sale of all of  
                Ingram's assets).  It provided that the releases executed between Ingram and McDermott encompassed releasing McDermott "from all claims except for the claims expressly reserved in the releases."    On July 20, 1973, the parties executed and exchanged elaborate releases jointly drafted by their attorneys. 11   Two separate releases were drafted for the two Ingram Companies;  however, we have reproduced only one in the margin because the provisions are identical in both releases
                

C. Something Went Wrong

Five years later McDermott was indicted by a federal grand jury for antitrust violations and other illegal activities. Upon nolo pleas, McDermott and Brown & Root were convicted. In July 1979, exactly six years after the releases were exchanged, Ingram initiated suit against McDermott. McDermott immediately (i) moved to dismiss the suit on the four year statute of limitations ground and (ii) moved for summary judgment on the basis of the releases. Ingram contended that the releases were vitiated due to fraud, which in turn, tolled the statute of limitations and would disallow dismissal of its suit. Various pretrial machinations ensued. Motions were made. Hearings were held. All of this resulted in the issuance of four opinions by Judge Morey L. Sear. We discuss the substance of the opinions chronologically.

First Decision (January 10, 1980)

As stated previously, after the...