INDUS. RISK INS'RS v. Creole Produc. Serv.

• Decision Date: 24 June 1983
• Docket Number: No. A79-199 CIV.,A79-199 CIV.
• Citation: INDUS. RISK INS'RS v. Creole Produc. Serv., 568 F. Supp. 1323 (D. Alaska 1983)
• Parties: INDUSTRIAL RISK INSURERS, an unin-corporated association, American International Reinsurance Company, Ltd., a citizen of a foreign state, and the Ancon Insurance Company, S.A., a citizen of a foreign state, Plaintiffs, v. CREOLE PRODUCTION SERVICES, INC., a Delaware corporation, Defendant. HARBOR INSURANCE COMPANY, Third-Party Plaintiff, v. FLUOR CORPORATION, a Delaware corporation, Fluor Alaska, Inc., and Fluor Engineers and Constructors, Inc., its wholly owned subsidiaries, Third-Party Defendants.
• Court: U.S. District Court — District of Alaska

568 F. Supp. 1323

INDUSTRIAL RISK INSURERS, an unin-corporated association, American International Reinsurance Company, Ltd., a citizen of a foreign state, and the Ancon Insurance Company, S.A., a citizen of a foreign state, Plaintiffs, v. CREOLE PRODUCTION SERVICES, INC., a Delaware corporation, Defendant.

HARBOR INSURANCE COMPANY, Third-Party Plaintiff, v. FLUOR CORPORATION, a Delaware corporation, Fluor Alaska, Inc., and Fluor Engineers and Constructors, Inc., its wholly owned subsidiaries, Third-Party Defendants.

No. A79-199 CIV.

United States District Court, D. Alaska, Anchorage Division.

June 24, 1983.

John A. Treptow, Atkinson, Conway, Bell & Gagnon, Karen L. Hunt, Anchorage, Alaska, for plaintiffs.

Henry J. Camarot, Camarot, Samdberg & Hunter, Anchorage, Alaska, for third-party defendants.

MEMORANDUM AND ORDER

VON DER HEYDT, District Judge.

THIS CAUSE comes before the court on the motion of Fluor Corporation, Fluor Alaska, Inc., and Fluor Engineers and Constructors, Inc. (Fluor) for summary judgment dismissing third-party plaintiff Harbor Insurance Co.'s claims. Jurisdiction is based on diversity of citizenship. As a preliminary matter, the court also disposes of Fluor's appeal from a magistrate's determination granting in part Harbor's motion to strike.

I. APPEAL OF MAGISTRATE'S RULING

Fluor appealed a ruling which struck from the record that portion of Mr. E.L. Patton's affidavit addressing the intent of paragraph F, amendment 6 to the contract between Alyeska and Fluor, Transalaska Pipeline System Agreement 357 (TAPS 357).

a. Standard of Review

Determinations by the Magistrate of non-dispositive motions referred pursuant to 28 U.S.C. § 636(b)(1)(A) (1976) will not be reconsidered unless clearly erroneous or contrary to law. Id. After a review of the challenged affidavit, the magistrate's order and the briefs submitted, the court concludes that the magistrate's order was neither clearly erroneous nor contrary to law and affirms the order.

The acknowledgement by E.L. Patton that it was the intent of Paragraph F to completely release Fluor from liability as a result of the explosion and fire at Pump Station No. 8 puts forth only the "unilateral understanding" of Mr. Patton as to the meaning of the contract and, without reference to conduct or communication between the contracting parties, is conclusory. See Over the Road Drivers, Inc. v. Transport Ins. Co., 637 F.2d 816, 819 (1st Cir.1980). Even though the First Circuit in Over the Road apparently considered the affidavits before deeming them insufficient to resist summary judgment, it is clear that the court concluded that the affidavits did not satisfy the requirements of Fed.R.Civ.P. 56(e). See Id., 637 F.2d at 819. Having concluded that the challenged portions of the Patton affidavit fail to satisfy the requirements of 56(e), a motion to strike is also appropriate. See J. MOORE, Moore's Federal Practice ¶ 56.221 n. 56 (2d ed.1981) and cases cited therein.

II. MOTION FOR SUMMARY JUDGMENT

Summary judgment may be granted if it appears from the record, after viewing all evidence and factual inferences in the light most favorable to the non-moving party, that there are no genuine issues of material fact and that the moving party is entitled to prevail as a matter of law. International Ladies Garment Workers Union v. Sureck, 681 F.2d 624, 629 (9th Cir.1982). The moving party has the burden of showing that no genuine issue of material facts exists. Ron Tonkin Gran Turismo, Inc. v. Fiat Distributors, Inc., 637 F.2d 1376, 1381 (9th Cir.) cert. denied 454 U.S. 831, 102 S.Ct. 128, 70 L.Ed.2d 109 (1981). For the reasons set forth below, the court concludes that Fluor's motion should be granted.

a. Background

Oil began flowing through the Trans Alaska Pipeline System on July 2, 1977. On July 8, 1977 leaking crude oil from one of the two pumps of Pump Station No. 8 exploded and engulfed the area in flame. One life was lost. The Alyeska Pipeline Service Company (Alyeska) was paid over $5,000,000 by its group of insurers, collectively known as IRI. IRI sued Creole Production Services, Inc. (Creole), which company had contracted with Alyeska to be in charge of the start up of Alyeska's pump stations.¹ IRI's original complaint contained 18 counts of negligence and also alleged that Creole was obligated to indemnify Alyeska and hold Alyeska harmless under its contract known as TAPS 3030.²

IRI amended its complaint by deleting the negligence claim, against which Creole had asserted comparative negligence in defense. The amended complaint relied solely on Creole's contractual obligation to hold Alyeska harmless. Creole also filed a third-party complaint against Fluor. Fluor had contracted with Alyeska to provide the detailed design of the pump stations and terminal facilities. See TAPS 357, Fluor's Motion for Summary Judgment, Ex. 2. The parties disagree radically over the extent of Fluor's contractual obligation and involvement in the design of the pump station. Although an obvious fact question, its resolution is not material to this motion.

IRI and Creole entered into a settlement agreement and Creole assigned its rights against Fluor to its insurer Harbor. Fluor previously moved to dismiss the Harbor complaint for failure to state a claim, inasmuch as IRI's complaint against Creole stated a claim in contract, while the third-party complaint was based on tort. In a June 3, 1981 memorandum the court concluded that Fluor might be liable in tort for damages to Creole arising from a recovery against Creole in contract and denied the motion.

b. Third-party Complaint

Creole's October 1, 1980 third-party complaint alleges in paragraph 4 that Fluor is liable to indemnify Creole for the entire amount of Creole's liability or pro rata on the basis of proportionate fault. Paragraph 6 alleges that Fluor expressly and impliedly warranted the safety of Pump Station 8 for intended and foreseeable purposes. Paragraph 7 alleges that Fluor was negligent in the design and manufacture of Pump Station 8, and as a result, the pump station was unreasonably dangerous. In its prayer, Creole requests judgment against Fluor for indemnity from all loss and pro rata allocation of any award in favor of plaintiff based on a finding of 100% fault in Fluor.

On November 8, 1982 Fluor filed a motion for an order granting summary judgment in its favor on the issue of liability. In effect, Fluor seeks a dismissal of the third-party complaint for the reason that the complaint, under any state of facts which may be proved, fails to state a claim upon which recovery from Fluor can be made.

Fluor's briefs have identified five potential theories of liability on the basis of the facts alleged in Harbor's complaint. Harbor's opposition to the motion for summary judgment does not attempt to assert other theories of liability running from Fluor to Harbor or its subrogee Creole and the court does not recognize additional theories available to Harbor on the facts alleged.

Briefly, the five broad theories of liability suggested by the facts alleged in Harbor's complaint are:

(1) Contribution by Fluor as a joint tort feasor with Harbor's subrogee Creole.

(2) Breach of warranty by Fluor in the design, production and installation of an unreasonably dangerous product.

(3) Partial indemnification in proportion to Fluor's percentage of fault.

(4) Indemnification implied from Fluor's alleged obligation to indemnify Harbor for its payment to IRI for damages resulting from Fluor's sole negligence.

(5) Liability for Harbor's economic loss resulting from injury to a third-party's (Alyeska) property.

After a careful review of the relevant pleadings, affidavits and memoranda, the court concludes that no genuine issues of material fact are present and that Fluor has established, as a matter of law that it is entitled to judgment in its favor on the issue of liability since Harbor's complaint, under any facts alleged, does not state a claim for recovery against Fluor.

c. Discussion

(i) Contribution.

Contribution in Alaska arises by operation of statute. Arctic Structures, Inc. v. Wedmore, 605 P.2d 426 (Alaska 1976). Alaska Stat. 09.16.010(d) (1982) states that a tort feasor who enters into a settlement with a claimant is not entitled to recover contribution from another tort feasor whose liability for the injury has not been extinguished by the release. Creole settled with the plaintiff, IRI. See Exh. 2, Harbor's opposition. Fluor was not named as a released party in that settlement. Id. Not surprisingly, although for differing reasons, the parties agree that Alas.Stat. 09.16.010 is not applicable. Accordingly, the court holds that Fluor has no liability to Creole for obligations arising from contribution.

(ii) Warranty.

As there was no contract between Creole and Fluor, no express warranty runs from Fluor to Creole, and Fluor has no obligations thereon. Neither can Fluor be liable to Harbor for Harbor's economic loss — its settlement with IRI — under an implied warranty on Fluor's services and products or strictly liable for an unreasonably dangerous product. Creole's injury is too attenuated to support a recovery based on products liability theory. Cf. Morrow v. New Moon Homes, 548 P.2d 279 (Alaska 1976) (no strict liability for economic loss); Ore-Ida Foods, Inc. v. Indian Head Cattle Co., 290 Or. 909, 627 P.2d 469 (1981) (no recovery for economic loss from negligent infliction of property damage where plaintiff has no interest in the damaged property); Pepsi Cola Bottling Co. v. Superior Burner Service Co., 427 P.2d 833 (Alaska 1967) (boiler repair company's negligent repair of plaintiff's boiler does not require application of strict liability).

(iii) Partial Indemnification.

Harbor's third-party complaint prays for indemnity based on an allocation of fault between Creole and Fluor, namely 100% liability in Fluor and 0% in Creole. In American Motorcycle Association v. Superior Court...