Hess Oil Virgin Islands Corp. v. Ingersoll-Rand Co., Civil No. 79-178

CourtUnited States District Courts. 3th Circuit. District of the Virgin Islands
Writing for the CourtCHRISTIAN, Chief Judge
PartiesHESS OIL VIRGIN ISLANDS CORPORATION, Plaintiff v. INGERSOLL-RAND COMPANY, Defendant/Third-Party Plaintiff v. UNIVERSAL OIL PRODUCTS COMPANY, LITWIN CORPORATION and CREOLE PRODUCTION SERVICES, INC., Third-Party Defendants
Docket NumberCivil No. 79-178
Decision Date22 January 1982

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HESS OIL VIRGIN ISLANDS CORPORATION, Plaintiff
v.
INGERSOLL-RAND COMPANY, Defendant/Third-Party Plaintiff
v.
UNIVERSAL OIL PRODUCTS COMPANY, LITWIN CORPORATION
and CREOLE PRODUCTION SERVICES, INC., Third-Party Defendants

Civil No. 79-178

District Court of the Virgin Islands Div. of St. Croix

January 22, 1982


Motions by third-party defendant in an action arising out of a fire in a refinery to vacate a previous court order which permitted plaintiff to amend its complaint to add parties defendant on the ground that the action against it was barred by the Illinois statute of limitations and for a protective order which would bar or limit discovery of compressor parts which allegedly caused the fire. The District Court, Christian, Chief Judge, held that although the parties had agreed that Illinois law would govern their legal relations, since the Virgin Islands had an interest in applying its longer statute of limitations, plaintiff's claim was not barred and that a protective order limiting discovery would be issued.

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BRITAIN H. BRYANT, ESQ. (BRYANT & LENAHAN, ESQS.), Christiansted, St. Croix, V.I., for plaintiff

WARREN B. COLE, ESQ. (ISHERWOOD, BARNARD & DIEHM, ESQS.), Christiansted, St. Croix, V.I., for defendant Ingersoll

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O'BRIEN & MOORE, ESQS., Christiansted, St. Croix, V.I.,/or third-party defendant Litwin

JOEL W. MARSH, ESQ., St. Thomas, V.I., for third-party defendant Universal

ALBERT A. SHEEN, ESQ. (HODGE, SHEEN, HODGE & MILLER, ESQS.), Christiansted, St. Croix, V.I., for third-party defendant Creole

CHRISTIAN, Chief Judge

MEMORANDUM AND ORDER

This case is before the Court on two motions of third-party defendant Universal Oil Products Company (hereinafter referred to as UOP). Each motion will be considered separately.

I. MOTION TO VACATE

UOP requests that an Order entered in this case on August 19, 1981, be vacated. Fed. R. Civ. P. 60(b)(6). It argues that the August 19th Order conflicts with a subsequent Order of the Court thereby causing it undue prejudice.

The facts which give rise to the present motion can be stated as follows: by motion dated August 7, 1981, plaintiff, Hess Oil Virgin Islands Corporation (HOVIC) sought leave to file an amended complaint adding UOP, Inc., UOP Process Division and Creole Production Services, Inc., as parties defendant. By motion dated August 17, 1981, and received by the Clerk of this Court on August 21st UOP requested an extension of time within which to respond to plaintiff's motion for leave to amend. By Order dated August 19th this Court granted the motion of plaintiff for leave to amend its complaint to add parties defendant. However by Order dated August 24, 1981, the Hon. Raymond Finch, U.S. District Court Judge sitting by designation, granted the motion of UOP for an additional three weeks within which to respond to the motion of plaintiff. Because the two orders appear to be in contradiction and inasmuch as the movant has raised substantive arguments in opposition to plaintiff's request that it be joined as a party defendant, the Order of this Court entered on August 19, 1981, will be vacated. Accordingly, the motion of plaintiff for leave to file an amended complaint, Fed. R. Civ. P. 15 (and the papers filed by UOP in opposition thereto) will be considered anew.

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II. MOTION FOR LEAVE TO FILE AN
AMENDED COMPLAINT

UOP strenuously argues in its two memoranda of law that an amendment of plaintiff's complaint to add parties is barred by the applicable statute of limitations which is said to be the statute of the State of Illinois. The incident which gave rise to this lawsuit—an explosion and fire at plaintiff's St. Croix refinery—occurred on August 8, 1975. Plaintiff's motion for leave to amend to add parties defendant almost comes precisely six years later. Under Illinois law, plaintiff would have to bring an action to recover damages done to property within 5 years after the cause of action had accrued,1 111. Rev. Stat, chapter 83, § 16. By contrast, under Virgin Islands law, "an action upon a contract" where no redress is sought for personal injuries or an action for "injuring personal property" may be brought within a six-year time period. 5 V.I.C. § 31(3)(A) and (D).2

UOP supports its contention that it is the five-year Illinois statute of limitations and not, as plaintiff argues, the six-year Virgin Islands statute of limitations which applies to this lawsuit, on two grounds: (1) a choice of law clause agreed to by the parties which specifies that Illinois law will determine the legal relations between the parties; and (2) a prior judicial ruling involving the same choice of law agreement between HOVIC and UOP which found that Illinois law controlled the contractual relations between the parties, Hess Oil Virgin Islands Corp. v. UOP Process Division, No. 75-C-383 (N.D. Okla. Nov. 9, 1979) (Order granting partial summary judgment at 11) and which thereby collaterally estops plaintiff from denying the effect of the Illinois statute of limitations. Plaintiff counters these arguments with a three-pronged thrust: (1) the choice of law agreement between the parties is, under the terms of Restatement (Second) of Conflict of Laws § 187, effective only as to substantive issues and is therefore not controlling on the procedural or remedial question of the applicable statute of limitations; (2) the prior judicial determination notwithstanding, the requirements for invoking collateral estoppel have not been met by UOP; and (3) even if the Illinois statute of limitations does apply, the proposed amended complaint "relates back" to and thereby tolls the running

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of the statute from the date on which defendant was put on notice of the "institution of the action." Fed. R. Civ. P. 15(c).

A) Choice of Law

Once the considerable verbiage set forth in the parties' arguments is pierced, the central question presented to the Court is whether or not effect is to be given to the choice of law clauses embodied in the three contracts which form the basis of at least part of plaintiff's proposed action against UOP.3 By paragraph 22 of the license agreement between Universal Oil Products Company and Hess Trading and Transport, Inc., the parties agreed that the terms of their contract as well as their "legal relations" would be "determined in accordance with the laws of the State of Illinois." By paragraph 9(e) of a subsequent engineering agreement entered into between UOP Processing Division and HOVIC the same choice of law clause is agreed to. The same provision is also contained in paragraph 10(c) of a guarantee agreement between UOP and HOVIC.

[1] Under the terms of section 187 of the Restatement (Second) of Conflict of Laws4 great deference is to be given to the parties' consensual choice of the state law which is to govern their contractual relations. That section reads in its entirety as follows:

§ 187. LAW OF THE STATE CHOSEN BY THE PARTIES
(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
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(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.
(3) In the absence of a contrary indication of intention, the reference is to the
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