991 F.2d 94 (4th Cir. 1992), 92-1094, Martin Marietta Corp. v. International Telecommunications Satellite Organization

Docket Nº:92-1094.
Citation:991 F.2d 94
Case Date:October 21, 1992
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

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991 F.2d 94 (4th Cir. 1992)





No. 92-1094.

United States Court of Appeals, Fourth Circuit

October 21, 1992

Argued June 3, 1992.

As Amended May 5, 1993.

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William Dill Rogers, Arnold & Porter, Washington, D.C., argued (Douglas A. Dworkin, Eric A. Rubel, Matthew Frumin, Arnold & Porter, Washington, D.C., and J. Hardin Marion, and William W. Carrier, III, Tydings & Rosenberg, Baltimore, Md., on brief), for defendant-appellant.

Andrew Lewis Frey, Mayer, Brown & Platt, Washington, D.C., argued (Evan M. Tager, Donald M. Falk, Mayer, Brown & Platt, Washington, D.C., and Benjamin R. Civiletti, James A. Dunbar, and John A. McCauley, Venable, Baetjer & Howard, Baltimore, Md., on brief), for plaintiff-appellee.

Before ERVIN, Chief Judge, WILLIAMS, Circuit Judge, and TILLEY, United States District Judge for the Middle District of North Carolina, sitting by designation.


ERVIN, Chief Judge:

Martin Marietta agreed to launch a satellite for the International Telecommunications Satellite Organization (INTELSAT), but the satellite ended up in a useless orbit. Martin Marietta then sought a declaratory

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judgment that it owed INTELSAT nothing under the agreement between the parties, and INTELSAT counterclaimed for negligence, negligent misrepresentation, gross negligence, and breach of contract. Martin Marietta moved to dismiss INTELSAT's counterclaims for failure to state a claim upon which relief may be granted, under Federal Rule of Civil Procedure 12(b)(6), and the district court granted the motion as to all of INTELSAT's claims. Finding that INTELSAT has stated two claims upon which relief may be granted, breach of contract and gross negligence, we affirm in part, reverse in part, and remand.


Martin Marietta and INTELSAT reached an agreement under which Martin Marietta would launch two satellites for INTELSAT. The relevant provisions of the parties' contract follow. In Article 2, Martin Marietta contracted to "make its Best Efforts to furnish Launch Services for the purpose of delivering INTELSAT's payload into orbit." In Article 1.2, the parties defined "Best Efforts" as "[d]iligently working in a good and workman-like manner as a reasonable, prudent manufacturer of launch vehicles and provider of Launch Services." Article 6 was entitled "Best Efforts Replacement Launch." Article 6.1 stated, "INTELSAT may request a Replacement Launch in the event that following any Launch under this Contract, the Titan III Mission or the Payload Mission has not been accomplished for any reason." In Article 6.7, the parties stated that a replacement launch "shall be the sole and exclusive remed[y] of the Buyer from Martin Marietta in the event the Titan III mission fails for any reason." Article 17 was entitled "Allocation of Certain Risks." In Article 17.1, the parties agreed that:

The following risks, arising out of or incident to the Launch Services to be provided by Martin Marietta and its subcontractors at every tier under this Contract are allocated between INTELSAT and Martin Marietta as set forth in this ARTICLE 17, notwithstanding any other provision of this Contract.

Article 17.5.1 provided:

Martin Marietta and INTELSAT agree that, with respect to injury to or death of persons involved in, or damage to property used in connection with, Launch Services to be furnished under this Contract, neither Party will make any claim against the other ..., and each Party shall bear its own risk of loss with respect to injury to or death of its own employees or damage to its own property howsoever caused.

Article 17.6, entitled "Limitation of Liability," stated:

Martin Marietta's liability to INTELSAT ... whether or not arising under contract, or in negligence, strict liability, or under any other theory of tort or liability, shall not include any loss of use or loss of profit or revenue or any other indirect, special, incidental or consequential damages. In no event shall Martin Marietta's liability to INTELSAT for any claim arising out of a particular Launch Services exceed the price for that Titan III Launch Services to be paid by INTELSAT ..., provided however that nothing in this paragraph shall affect any right of INTELSAT to a Replacement Launch ... under Article 6....

Finally, Article 21 specified that the contract was to be governed by Maryland law.

The first launch was unsuccessful. The satellite failed to separate from the launch vehicle when it was supposed to, due to Martin Marietta's wiring mistake. Eventually, INTELSAT separated the satellite from the launch vehicle, but the process of doing so (which involved separating the satellite from its booster rocket) made it impossible for the...

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