Martin Marietta Corp. v. Intelsat, Civ. A. No. MJG-90-1840.
| Decision Date | 13 May 1991 |
| Docket Number | Civ. A. No. MJG-90-1840. |
| Parties | MARTIN MARIETTA CORPORATION, Plaintiff, v. INTERNATIONAL TELECOMMUNICATIONS SATELLITE ORGANIZATION (INTELSAT), Defendant. |
| Court | U.S. District Court — District of Maryland |
Benjamin R. Civiletti, Jeffrey A. Dunn, James A. Dunbar, John A. McCauley, Venable, Baetjer & Howard, Baltimore, Md., for plaintiff.
William D. Rogers, Douglas A. Dworkin, Christopher M. Painter, Matthew A. Frumin, Lauren Gilbert, Arnold & Porter, Washington, D.C., and J. Hardin Marion, William W. Carrier, III, Tydings and Rosenberg, Baltimore, Md., for defendant.
This case involves the allocation of loss resulting from a failed satellite mission. Although the details may be complex, the essential facts can be stated simply.
International Telecommunications Satellite Organization ("INTELSAT") is an organization which operates commercial satellite and telecommunications systems for international clients representing approximately 119 countries. In August of 1987, INTELSAT contracted with Martin Marietta Corporation ("Martin Marietta") for the launch of two INTELSAT satellites on Titan III launch rockets. Martin Marietta agreed to furnish launch services to deliver each of the two satellites into orbit. In return, INTELSAT agreed to pay a fixed price for the launch of each satellite.
Martin Marietta's launch of the first satellite was unsuccessful, failing to properly place the satellite in the correct orbit. Shortly after the rockets lifted off, the satellite, along with the motor intended to boost it into the correct orbit (together referred to as the payload), failed to separate from the Titan III rocket at the correct time.1 INTELSAT eventually was able to separate the satellite from the Titan rocket, but was unable to boost the satellite into the proper orbit. INTELSAT sustained substantial losses due to the failure of the mission to correctly position the satellite for use by INTELSAT. For example, INTELSAT paid Martin Marietta approximately $112 million dollars for the launch services alone, and experts have estimated that the cost of rescuing the satellite may run as high as $90 million dollars. In addition, the satellite does not function at its present orbit and is useless.
Martin Marietta brought the present action seeking a declaratory judgment to absolve Martin Marietta of any liability for the incident. INTELSAT counterclaimed, asserting a breach of contract, and alleging negligence, gross negligence and negligent misrepresentation by Martin Marietta. In its Counterclaim, INTELSAT seeks damages for the lost value of the launch services, as well as for the lost use of the satellite, damage to the satellite and accompanying hardware, and the cost of rescuing the satellite, which rescue INTELSAT has yet to effect. Martin Marietta now seeks to dismiss INTELSAT's Counterclaim.2 Because further proceedings are necessary to resolve the breach of contract issues, this decision addresses only the tort claims contained in INTELSAT's Counterclaim.
Under well settled law, Martin Marietta's Motion to Dismiss must be denied "unless it appears to a certainty that no possible set of facts could be proved to support INTELSAT's claim." See Wolman v. Tose, 467 F.2d 29, 35 (4th Cir.1972) (citing Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). "Equally established is the rule that, on a motion to dismiss, the facts are to be taken in the light most favorable to INTELSAT." Id. (citing Jenkins v. McKeithen, 395 U.S. 411, 89 S.Ct. 1843, 23 L.Ed.2d 404 (1969)).
In its tort claims, INTELSAT seeks to recover from Martin Marietta damages for lost profits, lost use of the satellite, and rescue costs under theories of negligent misrepresentation, negligence and/or gross negligence. In its motion to dismiss, Martin Marietta contends that INTELSAT is precluded from recovering under any tort theory for two reasons. First, Martin Marietta argues that the Commercial Space Launch Act, a statute which requires all private commercial launch contracts to contain cross-waivers of liability, prohibits INTELSAT from bringing tort claims against Martin Marietta. Second, Martin Marietta contends that it owed INTELSAT no duty in tort, apart from those duties specified in the contract, to exercise reasonable care in performing the contract. Each argument will be addressed in turn.
The 1984 Commercial Space Launch Act, as amended in 1988, 49 U.S.C. app. §§ 2601-2623 (1988), requires all license holders who contract to provide private commercial space launch services to enter into reciprocal waivers of claims, under which all parties agree to assume their own risks of loss. 49 U.S.C. app. § 2615(a)(1)(C). According to the statute, all launch providers must obtain a license to conduct a private launch, 49 U.S.C. app. § 2605(a), and all licensees are subject to the reciprocal waiver provision.
In its motion to dismiss, Martin Marietta contends that by enacting the reciprocal waiver provision requirement, Congress intended to preempt all state law tort claims brought in connection with the launch service contract. In particular, Martin Marietta argues that the statute itself automatically creates mandatory reciprocal waivers in all contracts between launch participants, even if the contract itself contains no express waiver provisions. Martin Marietta asserts that the statute "reads in" such waivers by virtue of Congress' preemptive authority over state contract law.
To determine whether Congress intended the Act to read into contracts the required waivers of liability, it is necessary to review both the historical background and the statutory language of the Amendments. Congress enacted the Commercial Space Launch Act to regulate private commercial satellite launches, and amended the statute in 1988 to encourage industry expansion in a rapidly shrinking market. Prior to the passage of the 1988 Amendments, this country's private commercial space launch industry faced virtual shut-down because commercial launchers incurred huge liability risks and were unable to procure insurance at any price. Insurance and the U.S. Commercial Space Launch Industry, (printed for Committee on Commerce, Science and Transportation, July 1988) at 4-5.
As a result, Congress created a comprehensive regulatory scheme to allocate tort liability among all commercial space launch participants, including the government. The 1988 Amendments to the Act provide that "each license shall require the licensee to enter into reciprocal waivers of claims with launch participants; each party agrees to be responsible for any property damage or loss it sustains or for any personal injury to, death of, or property damage or loss sustained by its own employees resulting from activities carried out under the license." 49 U.S.C. app. § 2615(a)(1)(C). The Act also required launch providers to insure against injuries sustained by third parties. 49 U.S.C. app. § 2615(a)(1)(A).
This Court rejects Martin Marietta's argument that the 1988 Amendments create liability waivers for contracts in which no waivers expressly have been agreed upon by the parties. Nowhere does the statutory language even begin to suggest that cross-waivers will be imputed into contractual agreements which do not contain express cross-waiver provisions. The statute requires only that the licensee include cross-waivers in its contract. Should the licensee fail to comply with such requirements, the Department of Transportation has the power to revoke the launch provider's license, or otherwise discipline the license holder. However, nothing in the language of the statute indicates that a launch participant cannot be held liable if the contract does not contain the required waivers.
In fact, the language in Martin Marietta's license,3 which Martin Marietta procured pursuant to the Commercial Space Launch Act and the 1988 Amendments, declares that Martin Marietta can be held liable if cross-waivers are not provided in the contract itself. The license provides:
In the event that Martin Marietta fails to enter into, or fails to require other private party launch participants to enter into, waivers of claims required under this subparagraph (a), Martin Marietta shall indemnify and be responsible for any and all liability, loss or damage resulting from such failure.
Further, Section 6(b) of the license requires Martin Marietta to certify to the Office of Commercial Space Transportation that it will indemnify and be responsible for liability if it fails to enter or include such cross-waivers.4
In light of the language of the statute and of the license itself, the Court rejects Martin Marietta's claim that the Commercial Space Launch Amendments operate to impute cross-waiver provisions into the contract if the contract itself does not have them. Therefore, it becomes necessary to determine the validity of INTELSAT's tort claims in light of the specific contract provisions.
INTELSAT can succeed on its claims of negligence, gross negligence and negligent misrepresentation only if it can establish a duty in tort which exists separate and apart from the contractual duty. Martin Marietta argues, and the Court is persuaded, that INTELSAT cannot establish the existence of such a duty in tort distinct from the duty created by the contract. Beyond the duties of performance specified in the contract, Martin Marietta does not owe INTELSAT any duty of reasonable care in performance, other than (possibly) the duty not to intentionally, willfully or fraudulently abandon the contract.
The case of Jacques v. First National Bank, 307 Md. 527, 515 A.2d 756 (1986) outlines the three factors which are relevant in determining whether a duty exists in tort independent of contractual duty: (1) the nature of the harm — personal injury as opposed to purely economic damage; (2) the nature of the...
To continue reading
Request your trial
-
Superior Bank, F.S.B. v. Tandem Nat. Mortg., Inc.
...see Martin Marietta Corp. v. International Telecommunications Satellite Organization, 991 F.2d 94 (4th Cir. 1993) (citing 763 F.Supp. 1327 (D.Md. 1991)). The Purchase Agreement imposed numerous duties on Tandem, including, as Superior points out, an express duty to warrant that the represen......
-
Chevron U.S.A. Inc. v. Apex Oil Co.
...relationship between "sophisticated parties in positions of equal bargaining strength." Martin Marietta Corp. v. Int'l Telecomms. Satellite Org., 763 F.Supp. 1327, 1332 (D.Md.1991), aff'd in part, rev'd in part, 991 F.2d 94 (4th Cir.1992). Thus, "[r]ecognizing a tort duty here would be eras......
-
In re Connecticut Pizza, Inc., Bankruptcy No. 92-1-6259-DK. Adv. No. 94-1-A842-DK.
...by the United States District Court for the District of Maryland in the cases of Martin Marietta Corp. v. International Telecommunications Satellite Organization (INTELSAT), 763 F.Supp. 1327, 1330 (D.Md.1991), aff'd in part and rev'd in part, 991 F.2d 94 (4th Cir.1992), and Howard Oaks, Inc......
-
Pig Imp. Co., Inc. v. Middle States Holding Co.
...and affairs of business, the parties are in a position to contractually allocate risks among one another. Martin Marietta Corp. v. INTELSAT, 763 F.Supp. 1327, 1331-32 (D.Md.1991), rev'd in part on other grounds, 991 F.2d 94 (4th Cir.1992). See also, 21st Century Properties Co. v. Carpenter ......
-
Negligent Misrepresentation and the Economic Loss Rule
...ordinary arm's length negotiations, its negligent misrepresentation claim fails as a matter of law"); Martin Marietta Corp. v. Intelsat, 763 F.Supp. 1327, 1332 (D.Md. 1991) (under Maryland law, no negligent misrepresentation claim where relationship purely contractual); Flow Indus., Inc. v.......