Lloyd's Syndicate 457 v. Am. Global Mar. Inc.

• Decision Date: 16 October 2018
• Docket Number: CIVIL ACTION NO. H-16-3050
• Citation: Lloyd's Syndicate 457 v. Am. Global Mar. Inc., 346 F.Supp.3d 908 (S.D. Tex. 2018)
• Parties: LLOYD'S SYNDICATE 457, et al., Plaintiffs, v. AMERICAN GLOBAL MARITIME INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

346 F.Supp.3d 908

LLOYD'S SYNDICATE 457, et al., Plaintiffs,

v.AMERICAN GLOBAL MARITIME INC., et al., Defendants.

CIVIL ACTION NO. H-16-3050

United States District Court, S.D. Texas, Houston Division.

Signed October 16, 2018

Claude L. Stuart, III, James Clifton Hall, III, Karen Klaas Milhollin, Hall Maines Lugrin, P.C., Houston, TX, for Plaintiffs.

Randell E. Treadaway, Brett Michael Bollinger, Jeffrey E. McDonald, Zaunbrecher Treadaway Bollinger LLC, Covington, LA, for Defendants.

MEMORANDUM AND OPINION

Lee H. Rosenthal, Chief United States District JudgeInsurers who paid Chevron Corporation policy proceeds for damage to an oil drilling platform in the Gulf of Mexico have sued the platform's marine warranty surveyor, alleging breach of fiduciary duties, redhibition, products liability, and negligence under Louisiana law.The insurers are Lloyd's Syndicates; Arch Insurance Company(Europe) Limited; Axis Specialty Europe Limited; General Security Indemnity Company; Houston Casualty Company; Hyundai Marine and Fire Insurance Company; Infrassure Limited; International General Insurance Company Limited; International Insurance Company of Hannover Limited; Lancashire Insurance Company(UK) Limited; Mitsui Sumitomo Insurance Company; National Union Fire Insurance Company of Pittsburgh, Pennsylvania; Sompo Japan Insurance Incorporated; Statoil Forsikring A.S.; Tokio Marine and Nichido Fire Insurance Company Limited; and Zurich Insurance PLC UK (together, the "Underwriters").The marine warranty surveyor sued is American Global Maritime Inc.The Underwriters also sued American Global Maritime's foreign parent, grandparent, and sister companies, Global Maritime AS, Global Maritime Consultancy Limited, and Global Maritime Holdings Limited.The foreign Global Maritime companies moved to dismiss for lack of personal jurisdiction, and American Global Maritime moved for summary judgment.

For the reasons set out below, the court grants the motion to dismiss for lack of personal jurisdiction and grants the motion for summary judgment in part.As a result, the claims against Global Maritime Group, Global Maritime Consultancy, and Global Maritime Holdings are dismissed, without prejudice, and the fiduciary duty, redhibition, and products liability claims against American Global Maritime are dismissed, with prejudice.The motion for summary judgment as to the negligence claims is denied, without prejudice to the parties moving for summary judgment on an expanded record after discovery.

I.Background

a. Facts

In 2014, Chevron contracted with a number of companies to build an oil drilling platform with tension legs approximately 225 miles south of New Orleans, Louisiana.Project "Big Foot" was designed to reach through 5,185 feet of water to oil reserves beneath the seabed.Sixteen steel tethers, or "tendons," would secure the platform to the seabed.While the tendons were being installed, they would be clamped to tendon buoyance modules to keep them afloat.Each clamp had 12 bolts.

Heerema Marine Contractors Nederland BV and Heerema Marine Contractors U.S. Inc. transported and installed the platform parts.(Docket Entry No. 1-1at 13).McDermott Inc. procured and fabricated the tendons and buoyancy modules, and their components.(Id. ).Detail Design Inc. designed the buoyancy modules and specified the bolts for the clamps.(Id. ).FloaTEC LLC provided the "engineering design and analysis for the pre-service conditions to which the tendons, [buoyance modules] and associated parts would be subjected."(Id. ).

Chevron obtained insurance for the Big Foot Project.The primary policy, issued by Aon Limited, "insure[d] against all risks of physical loss" and "damage" for "works executed anywhere in the world in the performance of all contracts relating to the Project."(Docket EntryNo. 98-1at 61).The covered "works" included:

Project studies, engineering, contingencies, design, project management, procurement, fabrication, construction, prefabrication, storage, load out, loading/unloading, transportation by land, sea or air ..., towage, mating, installation, burying, hook-up, connection and/or tie-in operations, testing and commissioning, existence, initial operations and maintenance, testing, trials, pipelaying, trenching, and commissioning.

(Id. at 56).The Policy listed Chevron as one of the "Principle Assureds" and defined "Other Assureds" as "Project managers" or "[a]ny other company, firm person or party, including their contractors and/or sub-contractors and/or manufacturers and/or suppliers, with whom the Assured(s) named...have entered into written contract(s) in connection with the Project."(Id. ).A number of insurance companies underwrote the Policy.The Underwriters were subrogated "to all rights which the Assured may have against any person or other entity, other than Principle Assureds and Other Assureds, in respect of any claim or payment."(Id. at 57).

The Policy terms and conditions included requiring Chevron to hire a marine warranty surveyor to "review/attend/approve the major marine operations as appropriate."(Id. at 4–5).The Policy provided an allowance "of 2.5% on gross premium" for Chevron to hire a marine warranty surveyor and listed surveyors for Chevron to choose from.(Id. at 27).The listed candidates were London Offshore Consultants, Global Maritime, Noble Denton and Associates, and Matthews Daniel.(Id. at 45).Chevron chose Global Maritime.(Id. at 4).

Chevron and American Global Maritime entered into a service contract that required American Global Maritime to "review, witness, oversee, observe, approve and certify facilities as fit for transport, installation and duty pursuant to marine standards and [Chevron's Policy]."(Docket EntryNo. 98-2at 60).American Global Maritime agreed to review and certify the tendon installation.(Id. at 71–72).

On May 16, 2015, American Global Maritime issued a certificate of approval stating that it had "reviewed procedures, checked calculations and inspected preparation for float over and installation of ... the tendons ....[and] the operation is hereby approved."(Docket Entry No. 84at 246).The tendon installation went forward.On May 29, the tendons were connected to a foundation on the seabed and to the buoyancy modules.Nine of the sixteen tendons sank before they could be secured to the platform.The remaining seven tendons were taken back to shore.An inspection report stated that the clamp bolts had failed, causing the tendons to detach from the buoyancy modules and sink.The Underwriters paid Chevron approximately $500 million under the Policy for the damage the tendon detachment caused.

b. Procedural History

The Underwriters sued FloaTEC, Heerema Marine Contractors, McDermott, and Detail Design in the 234th District Court of Harris County, Texas in May 2016.(Docket EntryNo. 1-1).The Underwriters alleged that the bolts were underdesigned and failed to account for "static load from offsets caused by loop eddy currents,""fatigue load from ‘VIM’ and vibration," and "other contributing factors," and that FloaTEC had failed to account for these factors when it approved the bolts.(Id. at 14).The Underwriters asserted state-law claims for negligence, gross negligence, products liability, and redhibition.(Id. at 16–19).The Underwriters amended the complaint in early October, (Id. at 27), removing Detail Design as a defendant and increasing their damages claim, but asserting the same factual allegations and state-law claims.(Id. at 33).FloaTEC, Herrema, and McDermott timely removed to the United States District Court for the Southern District of Texas under 28 U.S.C. § 1441(a).(Docket EntryNo. 1).Federal subject-matter jurisdiction is based on the Outer Continental Shelf Lands Act, 43 U.S.C. § 1349(b)(1).

The Underwriters amended their complaint again.(Docket EntryNo. 9).The second amended complaint dismissed Herrema and McDermott from the action but joined American Global Maritime as a defendant.(Id. ).The second amended complaint alleged that FloaTEC:

failed to adequately account for compression of air in the [buoyancy modules] and drag resulting from VIM vibration in the tendons which caused large loads on the bolts.FloaTEC failed to include sufficient VIV-suppression in the tendon design to dampen or eliminate VIV, which led to fatigue cracks.FloaTEC also failed to provide design and fatigue loads for the [buoyancy modules] and clamp assembly design.FloaTEC failed to properly perform its duties as interface manager, resulting in a significant gap in analysis, design and data exchange between key components and entities involved in the design of the [buoyancy modules] and clamp assembly.These design, engineering and interface failures resulted in the collapse of the tendons and substantial damages to Chevron and ultimately to [the Underwriters].

(Id. at 7).The second amended complaint alleged that, as the Chevron-appointed marine warranty surveyor,

[American] Global Maritime's duties and obligations include, but are not limited to:

• technical engineering review and approval of design bases, engineering drawings, specifications, plans, procedures; and

• review and approval of operational aspects of the installation process of the tendons and ETLP.

(Id. at 8).This complaint alleged that American Global Maritime had: (1) failed to appoint competent personnel to review and certify the tendon installation and (2) failed to "identify and correct the glaring and obvious design errors that led to the collapse of the tendons."(Id. ).

The Underwriters asserted subrogated claims against FloaTEC and American Global Maritime.(Id. at 10).The Underwriters also claimed to have a direct cause of action against American Global Maritime that arose from its "legal duties to [the] Underwriters."(Id. ).The Underwriters asserted claims against American Global Maritime for negligence, negligent misrepresentation, breach of fiduciary duty, products liability, and...