Loggerhead Holdings, Inc. v. BP, P.L.C. (In re Deepwater Horizon)

• Decision Date: 02 September 2022
• Docket Number: 21-30573
• Citation: 48 F.4th 378
• Parties: IN RE: DEEPWATER HORIZON Loggerhead Holdings, Incorporated, Plaintiff—Appellant, v. BP, P.L.C. ; BP America, Incorporated ; BP Products North America, Incorporated ; BP America Production Company ; BP Exploration & Production, Incorporated, Defendants—Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

48 F.4th 378

IN RE: DEEPWATER HORIZONLoggerhead Holdings, Incorporated, Plaintiff—Appellant,

v.BP, P.L.C. ; BP America, Incorporated ; BP Products North America, Incorporated ; BP America Production Company ; BP Exploration & Production, Incorporated, Defendants—Appellees.

No. 21-30573

United States Court of Appeals, Fifth Circuit.

FILED September 2, 2022

James Weller Stroup, Stroup & Martin, P.A., Fort Lauderdale, FL, for Plaintiff—Appellant.

George W. Hicks, Jr., Aaron Lloyd Nielson, Kirkland & Ellis, L.L.P., Washington, DC, Devin Chase Reid, Esq., Liskow & Lewis, P.L.C., New Orleans, LA, for Defendants—Appellees.

Before King, Elrod, and Southwick, Circuit Judges.

Leslie H. Southwick, Circuit Judge:

Loggerhead Holdings, Inc., a holding company that owned a scuba diving cruise business, was one of many plaintiffs who brought suit against an oil company because of the explosion of an offshore drilling rig and the resulting discharge of a massive quantity of oil into the Gulf of Mexico. Loggerhead's claims were dismissed on summary judgment. We AFFIRM in part, REVERSE in part, and REMAND.

FACTUAL AND PROCEDURAL BACKGROUND

Loggerhead Holdings, Inc. began operating a scuba diving cruise business in 1986. The business relied on two special-purpose vessels named the Nekton Pilot and Nekton Rorqual that facilitated scuba expeditions. Beginning sometime after 2010, Loggerhead operated out of Fort Lauderdale on Florida's Atlantic shore and offered scuba-diving cruises for tourists in and around the Caribbean through its subsidiary, "Nekton Diving Cruises."

Loggerhead does not dispute that it suffered business setbacks in the late 2000s. Nekton's bookings declined significantly from 2008 to 2010. Loggerhead reported declining receipts and mounting net income losses from 2007 to 2009. Further, even though Loggerhead calculated positive earnings before interest, taxes, depreciation, and amortization ("EBITDA") throughout this period, it is apparent that its cruise business was encountering significant problems. In September 2009, Loggerhead put one of its vessels, the Pilot , into dry dock at Port St. Joe, Florida, for a refit of the vessel. Loggerhead's president, John Dixon, testified that the vessel was to be returned to service in June 2010. Despite that testimony, by April 2010, Loggerhead was not accepting bookings. Dixon testified that only $30,000 out of a projected $180,000 had been spent on parts for the Pilot.

About the same time, the Rorqual experienced problems of its own. Around April 10, 2010, the Rorqual 's starboard generator "had a casualty that was quickly fixed by installing a replacement generator." That same week, though, the replacement generator "had a low-oil pressure warning indication," and "Loggerhead limited its operation as a protective measure until the low-oil pressure condition could be diagnosed at Loggerhead's Port St. Joe facility." Loggerhead thus planned to return the Rorqual to Port St. Joe at the completion of its final winter itinerary on April 24, 2010. To facilitate the generator warranty check, Loggerhead canceled and allegedly rescheduled two weeks of summer cruises that were planned to depart on May 8 and May 15.

On April 20, 2010, Deepwater Horizon , a mobile offshore drilling unit hired by BP to drill the Macondo Well in the Gulf of Mexico, suffered a blowout, causing what would become an 87-day discharge of oil into the Gulf. Not long thereafter, the Rorqual went from the Turks and Caicos Islands to Port St. Joe on Florida's Gulf Coast. Dixon, in an affidavit, alleged that on the evening of May 2, 2010 — one day before arriving at Port St. Joe — the Rorqual encountered oil from the Macondo Well. The oil damaged the vessel's main engines, generators, reverse osmosis water makers, HVAC, grey, sanitary, and ballast water systems. Dixon asserted he "personally observed Macondo oil on the vessel." He acknowledged, though, that he did not have the oil tested to determine if it could be matched to the oil from the Macondo Well. BP asserted in district court, and Loggerhead did not contest, that "it is possible to ‘fingerprint’ petroleum through the use of gas chromatography in order to determine the source of the crude oil." Dixon's response was that he was unaware of any other wells that were leaking, and thus his "deduction" was that the oil must have come from BP's well.

On May 17, 2010, Loggerhead announced on its website it was ceasing cruising operations, giving several reasons but making no reference to the Deepwater Horizon disaster. Loggerhead did not return the $417,000 in deposits paid by its customers, and its Nekton Diving Cruises subsidiary soon filed an assignment for the benefit of its creditors. Shortly after, other diving companies offered credit to Nekton's customers for diving trips with them.

On August 10, 2010, the Judicial Panel on Multidistrict Litigation centralized all federal actions in the United States District Court for the Eastern District of Louisiana. In re Oil Spill by Oil Rig "Deepwater Horizon, " 910 F. Supp. 2d 891, 900 (E.D. La. 2012) ; see 28 U.S.C. § 1407. In 2012, BP entered two class settlements: one for medical claims and another for economic claims. See In re Deepwater Horizon , 723 F. App'x 247, 248 (5th Cir. 2018). Under the terms of the settlement for economic damages, class members released their claims in exchange for payment through a court supervised settlement program. In re Oil Spill , 910 F. Supp. 2d at 903. Loggerhead opted out of the settlement on September 19, 2012.

In 2013, Loggerhead sued a variety of BP entities in the United States District Court for the Southern District of Texas for claims arising from the Deepwater Horizon disaster. The suit was transferred to the Eastern District of Louisiana to join the others in that multidistrict litigation ("MDL"). Complying with a pretrial order, Loggerhead filed a new complaint in May 2016, asserting claims under the Oil Pollution Act ("OPA") for economic and physical damages. See 33 U.S.C. § 2702(b)(2)(B), (E). It also asserted a claim for compensatory and punitive damages under maritime law.

Following the close of the limited discovery allowed, BP moved for summary judgment. BP argued that Loggerhead failed to create a genuine factual issue that the Deepwater Horizon disaster caused it economic injury; thus, no reasonable jury could rule in Loggerhead's favor under the OPA or maritime law. BP also argued that Loggerhead's claim for damages due to physical injury failed because there was no evidence that the Rorqual had encountered oil discharged from the Macondo Well. Loggerhead's response included its tax returns from 2007-2014, along with a new declaration from Dixon. Loggerhead argued its economic losses were caused by the oil from the Deepwater Horizon and it could prove its economic losses with reasonable certainty through its financial statements. Regarding the claim for damages due to physical injury, Loggerhead responded that Dixon's deposition and affidavit established a genuine dispute of material fact as to whether oil from BP's well was what fouled the Rorqual 's engines and other systems.

The district court granted BP's motion for summary judgment on all claims. On the Section 2702(b)(2)(E) claim, the district court found that no jury could find Loggerhead's business failed because of the Deepwater Horizon disaster: "The evidence all points in one direction: that Loggerhead's business was going to fail in the Summer of 2010 regardless of whether the oil spill happened." The district court also held that no evidence supported Loggerhead suffered any loss in earnings resulting from "the injury, destruction, or loss of real property, personal property, or natural resources" as required by Section 2702(b)(2)(E). The court granted summary judgment on the claim. On the Section 2702(b)(2)(B) claim for "[d]amages for injury to, or economic losses resulting from destruction of, real or personal property," the district court assumed for summary judgment purposes that there may be a question of material fact regarding whether the Rorqual had been damaged from encountering BP's oil in the water. Still, the district court granted summary judgment on the claim because the only damages Loggerhead could recover under the statute would be "the cost of repairing the vessel's oil-damaged components, if any" and Loggerhead had not set out "such repair costs among its itemized list of damages."¹

Loggerhead timely appealed.

DISCUSSION

In reviewing an award of summary judgment de novo , we apply the same standard used by the district court. Rogers v. Bromac Title Servs., L.L.C. , 755 F.3d 347, 350 (5th Cir. 2014). With a motion for summary judgment, we ask whether, construing the facts in the light most favorable to the nonmoving party, the evidence is sufficient for a reasonable jury to find for the nonmovant. Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P. , 627 F.3d 134, 138 (5th Cir. 2010) ; Cuadra v. Houston Indep. Sch. Dist. , 626 F.3d 808, 812 (5th Cir. 2010). Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). "An issue is material if its resolution could affect the outcome of the action." Sierra Club, Inc. , 627 F.3d at 138 (quotation marks and citation omitted). Summary judgment should be granted "where critical evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor of the nonmovant." McCarty v. Hillstone Rest. Grp., Inc. , 864 F.3d 354, 358 (5th Cir. 2017) (quotation marks and citations omitted).

A party can present critical evidence, though, in many forms, even self-serving affidavits: " ‘[S]elf-serving’ affidavits and depositions may create fact issues even if not supported by the rest of the record." Guzman v. Allstate Assurance Co. , 18 F.4th 157, 160 (5th Cir. 2021). It is unremarkable that...