Diamond Serv.es Corp. v. Curtin Mar. Corp.
| Docket Number | Civil Action 4:22-CV-2117 |
| Decision Date | 06 March 2023 |
| Parties | DIAMOND SERVICEES CORPORATION, Plaintiff, v. CURTIN MARITIME CORPORATION, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
MEMORANDUM AND RECOMMENDATION
This is a Maritime action brought under the Foreign Dredge Act, 46 U.S.C. § 55109, the Jones Act, 46 U.S.C. § 55102 (formerly 46 App. U.S.C. § 883), the Mandamus Act, 28 U.S.C. § 1361, the Declaratory Judgment Act, 28 U.S.C § 2201, the Administrative Procedure Act, 5 U.S.C. 702 and U.S. Coast Guard regulations. Only vessels built in the United States are eligible to operate in U.S. coastwise trade. The Coast Guard has the administrative responsibility for certifying that vessels are built in the United States under the Jones Act. The present action involves the interpretation of federal law aimed at protecting the U.S. shipbuilding trade. The ultimate issue is whether the Coast Guard erred in ruling that using an intact crane and spuds from a foreign vessel, but attached to a vessel in a shipyard in the United States, does not disqualify that vessel from being considered American-built under the Jones Act.
Diamond Services (“Plaintiff”) seeks Declaratory and Injunctive relief pursuant to 28 U.S.C. § 2201 against Defendants the Department of Homeland Security (“Homeland Security”), the United States Coast Guard (“Coast Guard”), the National Vessel Documentation Center (“Center”), the United States of America, Admiral Linda L. Fagan in her capacity as Commandant of the Coast Guard (together, “the Federal Defendants”), Curtin Maritime Corporation (“Curtin”), and the Port of Houston Authority (“the Port”). Pending before the Court are Plaintiff's Motions for Summary Judgment against Curtin, the Port, and the Federal Defendants, Curtin's Motion to Dismiss under Rules 12(b)(1) and 12(b)(6), the Port's Motion to Dismiss under Rule 12(b)(1) and 12(b)(6), and the Federal Defendants' Motion for Summary Judgment. (Dkt. Nos. 13, 14, 24, 40, 41.)[1] Based on a review of the motions, arguments, record, and relevant law, the Court RECOMMENDS Plaintiff's Motions for Summary Judgment against Curtin, the Port, and the Federal Defendants (Dkt. No. 24, 40), be DENIED; Defendant Curtin's Motion to Dismiss under Rule 12(b)(1) (Dkt. No. 13), be GRANTED; Defendant the Port's Motion to Dismiss under Rule 12(b)(1) (Dkt. No. 14), be GRANTED; and the Federal Defendants' Motion for Summary Judgment (Dkt. No. 41), be GRANTED.
Plaintiff filed a Complaint on June 28, 2022, after the Coast Guard granted a coastwide endorsement to Curtin, Plaintiff's competitor. (Dkt. No. 1.) Curtin filed a motion to dismiss on August 19, 2022. (Dkt. No. 13.) The Port filed a motion to dismiss on August 26, 2022. (Dkt. No. 14.) On September 16, 2022, Plaintiff filed opposition to both motions and a motion for summary judgment against Curtin. (Dkt. Nos. 24, 25, 26.) The Federal Defendants filed the Administrative Record on October 31, 2022. On November 28, 2022, the Federal Defendants filed a motion for summary judgment and Plaintiff filed a motion for summary judgment against the Port and the Federal Defendants.[2] (Dkt. Nos. 40, 41.)
On September 10, 2019, Curtin wrote the Coast Guard to seek a preliminary determination if its dredging barge,[3] the DB AVALON, would be eligible to operate in coastwide trade with the inclusion of a foreign-sourced dredging crane and spuds.[4] (Dkt. No. 13 at 2.) Curtin planned on bolting the crane to the hull instead of welding it to the hull so it could be completely removable. (Dkt. No. 41 at 3.) The spuds would also be completely removable. (Id.) As such, the vessel would be a complete and intact vessel fully capable as operating as a vessel without the crane and spuds. (Id.) The Center, a division of the Coast Guard, consulted with personnel in the Coast Guard's Naval Architecture Division, and concluded that the use of a foreign-sourced dredging crane and spuds are not part of the vessel's hull or superstructure.[5] (Dkt. No. 1 at ¶ 52; Dkt. No. 41 at 3.) Center confirmed, even though the barge would include foreign sourced items, the DB AVALON would be eligible for coastwide determination because the barge would still be considered built in the United States. (Id.) Center relied on the “Review Criteria Memorandum” posted on its website, specifically sections (e) and (i). (Dkt. No. 41 at 4.) The memo explained cranes are not considered part of the hull structure and detachable floats that augment a vessel's stability or lifting capacity, like spuds, are not considered part of the hull if they are not necessary for normal stability. (Id.) Center confirmed that the barge's initial description satisfied both prongs of 46 C.F.R. § 67.97, requiring the barge to be U.S. built. (Id.) As such, it did not negatively implicate the foreign rebuilding provision of 46 C.F.R. § 67.177. (Id.) The barge was then constructed at a United States shipyard, in accordance with the Center's determination letter and applicable Coast Guard regulations. (Dkt. No. 13 at 5.) After construction was completed on July 27, 2022, Curtin obtained a Certificate of Documentation (“COD”) with a coastwide endorsement so the barge could engage in activities like dredging.[6] (Id. at 2, 6.)
Simultaneously, the Port solicited bids to expand the Houston Ship Channel and Curtin was one of six companies to bid on the project. Plaintiff was not one of the six to bid, nor was it listed as a subcontractor for the project.[7] (Id.; Dkt. No. 1 at ¶ 5; Dkt. No. 13 at 6.) Curtin and one other company, Weeks Marine, were awarded the project on June 17, 2022. (Dkt. No. 1 at ¶ 28.) Plaintiff did not file a written protest or request further explanation from the Port. (Dkt. No. 14-1.) Plaintiff now seeks an injunction to preclude the Port from disbursing any funds or work to Curtin for the use of the DB AVALON. (Dkt. No. 1 at 15-16.) Plaintiff claims it will suffer irreparable harm because Curtin was awarded the job and it will potentially use the DB AVALON on the project and it cannot fairly compete with a barge with foreign sourced components. (Dkt. 1 at ¶ 67.) Plaintiff further alleges if Curtin begins work, the Port cannot rebid the project to a company with compliant dredges such as their own, so the Port and Curtin should be enjoined from beginning the project. (Id. at ¶ 67.)
Plaintiff claims that Center's determination that the crane and spuds are not part of the hull or superstructure is contrary to the law and regulations, and it violates the plain language and clear intent of 46 C.F.R. § 67.97 and § 67.177. (Dkt. No. 1 at ¶ 56-57.) Alternatively, Plaintiff claims if that determination is permissible, then 46 C.F.R. § 67.97 and § 67.177 violate § 12101, § 55109, and the Jones Act generally.
Standing is a threshold requirement when determining whether subject matter jurisdiction exists. Juidice v. Vail, 430 U.S. 327, 331 (1977). To have Article III standing, “a plaintiff must show (1) it has suffered an ‘injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” El Paso Cnty., Texas v. Trump, 982 F.3d 332, 337 (5th Cir. 2020). “[I]t is a long-settled principle that standing cannot be inferred argumentatively from averments in the pleadings.” FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231 (1990). Instead, a plaintiff must allege facts that are “essential to show jurisdiction.” Id. A plaintiff seeking injunctive or declaratory relief must also satisfy this standard. Waller v. Hanlon, 922 F.3d 590, 603 (5th Cir. 2019); Stringer v. Whitley, 942 F.3d 715, 720 (5th Cir. 2019). At the summary judgment stage, Rule 56 requires a plaintiff seeking summary judgment to go beyond the pleadings and submit specific admissible evidence establishing its standing, including redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).
“Federal courts are courts of limited jurisdiction” and their power cannot be expanded by judicial decree. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); see also Energy Mgmt. Servs., LLC v. City of Alexandria, 739 F.3d 255, 257 (5th Cir. 2014). Federal courts have original jurisdiction over civil actions arising under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. “Federal question jurisdiction exists when ‘a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.'” Borden v. Allstate Ins. Co., 589 F.3d 168, 172 (5th Cir. 2009) (quoting Franchise TaxBd. v. Constr. Laborers Vacation Tr., 463 U.S. 1, 27-28 (1983)). Courts “must presume that a suit lies outside [it's] limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum.” Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001) (citing Kokkonen, 511 U.S. at 377). When both subject matter jurisdiction and failure to state a claim are at issue in a case, the court should “consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits.” Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).
A court may consider the complaint alone; the complaint supplemented by the undisputed facts evidenced in the record; or the complaint supplemented by undisputed...
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