Johnson v. Colonial Pipeline Co.

• Decision Date: 14 July 1993
• Docket Number: Civ. A. No. 93-446-A.
• Citation: 830 F. Supp. 309
• Parties: Steven K. JOHNSON, et al., Plaintiffs, v. COLONIAL PIPELINE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

830 F. Supp. 309

Steven K. JOHNSON, et al., Plaintiffs, v. COLONIAL PIPELINE COMPANY, Defendant.

Civ. A. No. 93-446-A.

United States District Court, E.D. Virginia, Alexandria Division.

July 14, 1993.

Marc Allan Bushman, Neville Paul Crenshaw, Bushman & Bushman, Fairfax, VA, for plaintiffs.

John Jay Range, Hunton & Williams, Washington, DC, for defendant.

MEMORANDUM OPINION

HILTON, District Judge.

This matter came before the court on the defendant's Motion to Dismiss or in the alternative for Summary Judgment. The court ruled from the bench granting defendant's motion on June 4, 1993 and entered an order dismissing this case on June 15, 1993. The court now issues this memorandum opinion to amplify its previously stated reasons.

Plaintiffs seek injunctive relief, economic losses, and other damages suffered as a result of the release of oil in the vicinity of their property in Loudoun County, Virginia on March 28, 1993.

Colonial owns and operates an interstate, overland pipeline system that transports petroleum products from Texas to New York. On March 28, 1993, Colonial's 36-inch pipeline ruptured near the parking lot of Reston Hospital in Reston, Virginia. Some of the fuel oil from the pipeline spread overland to a creek known as Sugarland Run, which is located approximately 200 yards from the point of the rupture. Sugarland Run is a tributary of the Potomac River.

Plaintiffs filed their complaint in this case on April 2, 1993. They filed their First Amended Complaint on May 6, 1993. The suit contains seven counts: (1) violation of the Oil Pollution Act of 1990; (2) violation of the Virginia State Water Control Law; (3) maritime negligence; (4) common law trespass; (5) private nuisance; (6) public nuisance; (7) punitive damages. Plaintiffs assert federal jurisdiction on the basis of diversity jurisdiction, admiralty and maritime jurisdiction, federal question jurisdiction, and principles of supplemental jurisdiction.

I. Oil Pollution Act

The federal statutory violation alleged by plaintiffs is the Oil Pollution Act of 1990, 33 U.S.C. § 2701, et seq. ("OPA"). OPA provides that all claims for damages shall be presented first to the party responsible for the spill. See 33 U.S.C. § 2713(a). If such a claim is presented and the responsible party denies all liability or the claim is not settled within 90 days, the claimant may elect to commence an action in court against the responsible party. See 33 U.S.C. § 2713(c). If plaintiffs fail to comply with the prerequisites for bringing such a claim, the OPA claim must be dismissed. Cf. Hallstrom v. Tillamook County, 493 U.S. 20, 31, 110 S.Ct. 304, 311, 107 L.Ed.2d 237 (1989) (plaintiff's failure to comply with Resource Conservation and Recovery Act's 60-day notice and presentation requirement mandates dismissal of case).

The purpose of the claim presentation procedure is to promote settlement and avoid litigation. Congress believed that lawsuits against parties are appropriate only "where attempts to reach a settlement with the responsible party ... were unsuccessful." H.R.Rep. No. 242, 101st Cong., 1st Sess., pt. 2, at 66 (1989). It therefore mandated a 90-day period in which the parties would attempt to resolve monetary disputes arising from oil spills prior to commencing litigation. The hope was to avoid costly and cumbersome litigation. See 135 Cong.Rec. at H 7962, 7965 (statements of Rep. Hammerschmidt and Rep. Lent).

In this case, plaintiffs have not complied with the presentation requirement of OPA. They filed this suit on April 2, 1993 without having first presented a claim to Colonial. Thereafter, apparently realizing their failure to comply, plaintiffs sent a letter to Colonial on April 7, 1993, which purports to present an OPA claim. However, the April 7 letter fails to cure the jurisdictional defect for two reasons.

First, Colonial has not denied all liability under OPA and 90 days have not passed since the claim was presented. At least one of these events must occur before an OPA action may proceed.

Second, the plaintiffs' April 7 letter fails to "present" a claim within the meaning of 33 U.S.C. § 2713(a). As noted, the purpose of OPA's claim presentation requirement is to enable the parties to negotiate, if possible, a settlement of potential claims resulting from an oil spill without having to resort to litigation. The settlement is to be in the form of "payment within 90 days after the date upon which the claim was presented." 33 U.S.C. § 2713(c)(2). In order to accomplish this purpose, the claim presented must inform the responsible party with some precision of the nature and extent of the damages alleged and of the amount of monetary damages claimed. Otherwise, the responsible party will be unable to make an informed offer of its own, unable to engage in meaningful substantive negotiations, and thus unable to settle the matter by agreeing to a final amount. Instead, the responsible party will have to ask for a more definite statement of the claim, as Colonial has done here, and the 90-day period will be spent trying to obtain basic information rather than actually negotiating a settlement.

The need for specificity in OPA claims is underscored by the regulations issued by the United States Coast Guard pursuant to OPA setting forth the requirements for filing such claims against the OPA Fund. See 57 Fed. Reg. 36314 (1992) (codified at 33 C.F.R. pt. 136). The Coast Guard regulations state that a claim must provide, inter alia, a general description of the nature and extent of the impact of the oil spill and the associated damages, a list of the damages with a "sum certain" attributed to each type of damage listed, and evidence to support the claim. See 33 C.F.R. §§ 136.105, 136.109.

Measured against the purposes of the OPA claims presentation procedure, as well as the Coast Guard regulations, the plaintiffs' April 7 letter is plainly inadequate. The letter conclusorily recites that the claim is for "damages for injury to or economic losses resulting from the destruction of rent property owned by the claimants," as well as for loss of income, elimination of property value, mental distress, loss of use and enjoyment of property, loss of quality of life, and disruption. Plaintiffs make no effort to describe the nature or extent of these alleged damages, much less to explain the basis for claiming that these damages have been sustained. They fail to state a sum certain for any of the types of damages alleged. Indeed, they do not give any suggestions as to the amount of damages they are claiming.

Plaintiffs' letter does not provide Colonial with enough information to accept the claim and make a payment that will settle the matter, or even to formulate an offer of its own that might lead to settlement. Thus, Colonial is unable to negotiate meaningfully with plaintiffs, as it has done with other claimants, many of whose claims have been resolved. Plaintiffs' letter is simply an afterthought, sent to Colonial after plaintiffs had already sued in the hope of curing a profound jurisdictional defect.

Plaintiffs have thus never "presented" their claims as required by OPA. Even if they had, they could not maintain this lawsuit because Colonial Pipeline has not denied all liability and the 90-day negotiating period has not expired. Count I therefore must be dismissed.

II. Diversity Jurisdiction

Because this court lacks federal question jurisdiction under 28 U.S.C. § 1331, the supplemental state claims must be dismissed unless the plaintiffs can satisfy the requirements of diversity jurisdiction under 28 U.S.C. § 1332 or admiralty or maritime jurisdiction under 28 U.S.C. § 1333.

Even though Colonial Pipeline is incorporated in Virginia, plaintiffs argue that this court possesses diversity jurisdiction because its Virginia incorporation was an involuntary addition to its incorporation in Delaware. To conduct business in Virginia, a foreign corporation must merely register with the State Corporation Commission. See Va.Code § 13.1-759. However, a foreign corporation must reincorporate in Virginia in order to act as a public service company. See Va. Const., art. IX, § 5 and Va.Code § 56-49. To enable Colonial to obtain the privilege of exercising the power of eminent domain, the company formed a wholly-owned subsidiary in Virginia pursuant to the constitutional requirement which was formerly codified as § 163 of the Virginia Constitution. See Colonial Pipeline Company v. Commonwealth of Virginia, 206 Va. 517, 519, 145 S.E.2d 227, 229 (1965). The United States Supreme Court has held that reincorporation pursuant to § 163 of the Virginia Constitution voluntarily relinquishes federal diversity jurisdiction. Railway Express Agency, Inc. v. Virginia, 282 U.S. 440, 444, 51 S.Ct. 201, 202, 75 L.Ed. 450 (1931) (Holmes, J.). This court therefore lacks diversity jurisdiction because both plaintiffs and the defendant are citizens of the Commonwealth of Virginia. Accord Donahue v. Colonial Pipeline Company, Civil Action No. 87-207-N (E.D.Va. 1987) (MacKenzie, J.).

III. Maritime and Admiralty Jurisdiction

This court lacks maritime and admiralty jurisdiction because the pipeline leak did not occur on navigable waters and plaintiffs' tort claims bear no significant relationship to maritime activity. Admiralty jurisdiction is rooted in the existence of the law of admiralty that has evolved over the centuries to deal with special kinds of disputes, those arising from navigation of the seas. Executive Jet Aviation, Inc. v. Cleveland, 409 U.S. 249, 269-70, 93 S.Ct. 493, 505, 34 L.Ed.2d 454 (1972); See also Sisson v. Ruby, 497 U.S. 358, 110 S.Ct. 2892, 111 L.Ed.2d 292 (1990). When this special body of law is invoked under admiralty jurisdiction, it tends to preempt state regulation of matters that otherwise would fall within the ambit of local control. See Oman v. Johns-Manville Corp., 764 F.2d 224, 227 (4th Cir.1985), cert. denied, 474 U.S. 970, 106 S.Ct. 351, 88...