Diamond Offshore Co. v. Survival Sys. Int'l, Inc.

• Citation: 902 F.Supp.2d 912
• Decision Date: 10 October 2012
• Docket Number: Civil Action No. H–11–1701.
• Parties: DIAMOND OFFSHORE COMPANY, Plaintiff, v. SURVIVAL SYSTEMS INTERNATIONAL, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

902 F.Supp.2d 912

DIAMOND OFFSHORE COMPANY, Plaintiff,

v.SURVIVAL SYSTEMS INTERNATIONAL, INC., Defendant.

Civil Action No. H–11–1701.

United States District Court,

S.D. Texas,

Houston Division.

Oct. 10, 2012.

Laura Lee Haley, Diamond Offshore Drilling Inc., Anthony David Weiner, Houston, TX, for Plaintiff.

Kathleen K. Charvet, Lewis, Brisbois, Bisgaard & Smith, LLP, New Orleans, LA, Maureen O'Connor Sullivan, Lewis, Brisbois, Bisgaard & Smith, LLP, Lafayette, LA, Kent M. Adams, Lewis, Brisbois, Bisgaard & Smith, LLP, Houston, TX, for Defendant.

Order

GRAY H. MILLER, District Judge.

Pending before the court is (1) a motion to dismiss defendant Survival Systems International, Inc.'s (“SSI”) counterclaims filed by plaintiff Diamond Offshore Company (“Diamond”) (Dkt.47); and (2) a motion for summary judgment filed by SSI (Dkt.58). Having considered the motions, responses, replies, and applicable law, the court is of the opinion that Diamond's motion to dismiss should be GRANTED IN PART AND DENIED IN PART and SSI's motion for summary judgment should be GRANTED IN PART AND DENIED IN PART.

I. Background

This case arose from an accident occurring on May 17, 2010, in which a lifeboat aboard Diamond's Mobile Offshore Drilling Unit the Ocean Ambassador fell into the water during a lifeboat drill. Dkt. 31. There were four crewmembers aboard the lifeboat, two of whom did not survive the accident, and two of whom were injured. Id. Diamond contends that the lifeboat fell because the hooks holding the lifeboat up opened while the crewmembers were on board. Id. These hooks—Triple5 lifeboat hooks—were designed and manufactured by SSI. Id.

Diamond and SSI entered into several purchase orders for the purchase of the Triple5 lifeboat hooks. Dkt. 76. The purchase orders include a warranty that the goods that are the subject of the purchase order are free from defect, of merchantable quality, and fit for the intended purpose for which they are purchased. Dkt. 76, Exhs. 3, 4. Diamond alleges that SSI represented that the Triple5 lifeboat hooks were “fail safe” and could not open when then weight of the lifeboat was on the hook. Dkt. 31 & Exh. 2. After the lifeboat accident, Diamond claims it revoked its acceptance of the Triple5 lifeboat hooks. Dkt. 31. Diamond also conducted an audit and subsequently issued an internal safety bulletin called a Flash Alert in which it noted that the Triple5 hooks on two other lifeboats were open more than the manufacturer's recommendation and that the release handles had shifted from a vertical position to a less than vertical position. Dkt. 20, Exh. 1. Additionally, Diamond paid the widow of one of the crewmen who was killed in the accident $2.75 million in exchange for a release of all liability from the accident. Dkt. 76.

Diamond initiated this lawsuit on May 4, 2011. Dkt. 1. It claims that (1) SSI breached the multiple written contracts (the purchase orders) for the purchase of the Triple5 hooks; (2) SSI breached express and implied warranties relating to the hooks; (3) SSI was negligent and grossly negligent in the way it designed and manufactured the hooks; (4) SSI failed to warn Diamond about known risks associated with the hooks; (5) SSI knowingly or negligently made misrepresentations about the design, manufacture, operability, quality, and safety of the hooks; (6) SSI's representations or omissions about the hooks were fraudulent; (7) SSI fraudulently induced Diamond to purchase the hooks; and (8) SSI is strictly liable to Diamond, its employees and contractors, for the property damage, physical injury, and deaths that allegedly resulted from the allegedly unreasonably dangerous hooks. Dkt. 31. Diamond seeks a declaration that its revocation was proper, that any purported limitation to SSI's warranty of the hooks is void or not effective, that there is no limitation on SSI's liability, warranty or damages under the purchase orders, and that SSI is liable for the alleged failure of the hooks. Id. Diamond also seeks, among other things, attorneys' fees, and all actual, direct, special, consequential,and incidental damages arising from its claims, including the losses from testing and replacing the Triple5 hooks, the lost profits associated with the failure of the Ocean Ambassador to operate during the investigations and other items associated with the accident, and the amounts it paid in settlement of claims associated with the injuries and deaths occurring because of the alleged failure of the hooks. Id.

SSI filed its answer and counterclaim on June 27, 2011. Dkt. 5. SSI asserted twenty-one counterclaims, including various tort claims associated with an alleged defamatory statement or statements made by Diamond relating to SSI's Triple5 hooks under California, Texas, Louisiana, and maritime law, and a breach of contract claim under Texas and Louisiana law. Dkts. 5, 15. On July 15, 2011, Diamond moved to dismiss the counterclaims, arguing that the allegedly defamatory statement—the Flash Alert—was, in reality, an internal safety alert that was completely true. Dkts. 8, 20. The court dismissed the defamation claims under California, Texas, Louisiana, and maritime law, finding that the alleged defamatory statement could not reasonably be construed as having a defamatory meaning. Dkt. 30. The court did not, however, reach the other claims, as it found the briefing provided on the other claims was incomplete. Id.

Diamond now moves for dismissal of SSI' remaining counterclaims, arguing that the court's finding that the statement in the Flash Alert was not defamatory necessarily precludes SSI's other counterclaims, which all rely on the Flash Alert as the alleged “wrongful conduct.” Dkt. 47. SSI contends that Diamond's motion is too narrowly drawn and must be denied. Dkt. 54. SSI argues that the Flash Alert is only one example of Diamond's alleged wrongful acts and omissions. Id. SSI points out that the complaint actually discusses a “campaign to damage and discredit SSI and the Triple 5 hooks in the maritime life-saving equipment community,” and SSI contends that the Flash Alert was only part of that campaign. Id.

Additionally, SSI moves for summary judgment on all of Diamond's claims, asserting, as an issue of first impression, that federal law impliedly preempts Diamond's claims in their entirety because the claims involve maritime transport and trade, which is an area of the law that has been uniquely federal since the beginning of the Republic. Dkt. 58. According to SSI, the hooks were approved pursuant to extensive regulations promulgated by the U.S. Coast Guard (“USCG”) relating to the safety of individuals and property on board vessels subject to its inspection. Id. These regulations relate to the design, construction, alteration, repair, and operation of lifesaving equipment. Id. Diamond argues that (1) it is not even clear that the hooks were appropriately approved by the USCG; (2) regardless, the hooks open while on-load and thus are in violation of USCG regulations; (3) Texas law governs under the contract or contracts so federal law cannot govern; (4) controlling case law from the U.S. Supreme Court indicates that USCG regulations do not preempt state tort law; (5) SSI has failed to overcome the presumption against preemption; and (6) SSI has not met its burden of showing that Congress clearly intended to preempt claims like Diamond's. Dkt. 76.

SSI moves, in the alternative, for partial summary judgment on Diamond's claim for damages arising from settlements of tort claims resulting from the accident. Dkt. 58. SSI claims that Diamond's claim for settlement damages is in reality a common-law indemnity claim, which is not available under Texas law. SSI additionally argues that Diamond has actively committed acts of negligence, including failing to train the helmsman and other personnel, and any amounts paid in settlement were for a violation of Diamond's own duties. Id. SSI also argues that even if the Triple5 hooks were defectively designed, it was not reasonably foreseeable that Diamond would voluntarily pay claims it did not owe for injuries caused by the hooks. Id. Diamond argues that its claim for damages associated with its settlement of the personal injury and death claims is appropriate because the settlement was a foreseeable consequence of SSI's conduct and that it had to settle to mitigate its damages.

II. Motion to Dismiss

A. Legal Standard

“Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964–65, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). In considering a 12(b)(6) motion to dismiss a complaint, courts generally must accept the factual allegations contained in the complaint as true. Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir.1982). The court does not look beyond the face of the pleadings in determining whether the plaintiff has stated a claim under Rule 12(b)(6). Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir.1999). “[A] complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, [but] a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 127 S.Ct. at 1964–65 (citing Sanjuan v. Am. Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th Cir.1994)) (internal citations omitted). And, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 127 S.Ct. at 1965. The supporting facts must be plausible—enough to raise a reasonable expectation that...