Packgen v. BP Exploration & Prod., Inc.

• Decision Date: 19 July 2013
• Docket Number: No. 2:11–cv–00393–JAW.,2:11–cv–00393–JAW.
• Citation: 957 F.Supp.2d 58
• Court: U.S. District Court — District of Maine
• Parties: PACKGEN, Plaintiff, v. BP EXPLORATION & PRODUCTION, INC., and BP America Production Company, Defendants.

957 F.Supp.2d 58

PACKGEN, Plaintiff,

v.BP EXPLORATION & PRODUCTION, INC., and BP America Production Company, Defendants.

No. 2:11–cv–00393–JAW.

United States District Court,

D. Maine.

July 19, 2013.

Michael R. Bosse, Michael A. Fagone, Travis M. Brennan, Bernstein Shur Sawyer & Nelson, Portland, ME, for Plaintiff.

Christina Briesacher, Courtney Zanocco, Kirkland & Ellis, Chicago, IL, David Jon Volkin, Amy Cashore Mariani, Fitzhugh & Mariani LLP, Boston, MA, for Defendants.

ORDER ON MOTION FOR SUMMARY JUDGMENT

JOHN A. WOODCOCK, JR., Chief Judge.

This diversity case arose in the wake of the well-publicized Deepwater Horizon oil spill. When the oil began to spill, Packgen, a Maine producer of packaging products, saw an opportunity to manufacture and sell oil containment boom. Packgen worked to negotiate a sale to BP for several months, altering its boom design based on BP's input, and subjecting its boom to field tests and third-party assessments. Ultimately, however, Packgen was not added to BP's list of approved vendors until after the oil had stopped spilling, and BP never purchased any boom from Packgen. Packgen was able to sell 60,000 feet of boom to another purchaser at a depressed price, but claims that BP reneged on an oral agreement and seeks recovery for its losses under a variety of legal theories. BP raises a statute of frauds defense and moves for summary judgment. The Court concludes that there is no genuine issue of material fact and grants summary judgment for BP on all counts.

I. STATEMENT OF FACTSA. Procedural History

On October 19, 2011, Packgen filed a complaint in this Court against BP Exploration & Production, Inc., BP America Production Company, and BP, p.l.c., alleging misrepresentation, breach of contract, and other claims related to an alleged oral contract for the sale of oil containment boom. Compl. (ECF No. 1). On November 14, 2011, Packgen voluntarily dismissed BP, p.l.c. Notice of Voluntary Dismissal of Def. BP, P.L.C. (ECF No. 8). The remaining Defendants (collectively BP) answered the Complaint on December 5, 2011. Answer and Affirmative Defenses of BP Exploration & Production, Inc. and BP America Production Co. (ECF No. 12). BP filed an amended answer on February 13, 2012. Am. Answer of BP Exploration & Production, Inc. and BP America Production Co. (ECF No. 22).

BP moved for summary judgment and requested oral argument on September 10, 2012. Defs. BP Exploration & Production, Inc., and BP America Production Co.'s Mot. for Summ. J. and Request for Oral Argument (ECF No. 41); Defs.' Mem. in Support of Its Mot. for Summ. J. (ECF No. 42–1) ( Defs.' Mot.); Statement of Undisputed Facts and Defs.' Suppl. Facts (ECF No. 42–2) (DSMF). Packgen responded on October 2, 2012. Pl. Packgen's Mem. in Opp'n to Def. BP's Mot. for a Summ. J. (ECF No. 79) ( Pl.'s Opp'n ); Packgen's Objections and Resps. to Defs.' Statement of Undisputed Facts and Pl.'s Suppl. Facts (ECF No. 80) (PRDSMF and PSAMF). BP replied on October 15, 2012. Reply Brief in Support of Defs.' Mot. for Summ. J. (ECF No. 97) ( Defs.' Reply ); Defs.' Objections and Resps. to Pl.'s Suppl. Facts (ECF No. 98) (DRPSAMF).

Packgen filed a supplemental memorandum on October 16, 2012. Pl. Packgen's Suppl. Mem. in Opp'n to Def. BP's Mot. for a Summ. J. (ECF No. 99) ( Pl.'s Suppl. Opp'n ); Packgen's Additional Statement of Material Facts Pursuant to Local Rule 56(c) (ECF No. 99–1) (PSAMF). BP responded on October 19, 2012. Suppl. Reply Brief in Support of Defs.' Mot. for Summ. J. (ECF No. 104) ( Defs.' Suppl. Reply ); Defs.' Objections and Resps. to Packgen's Additional Statement of Material Facts (ECF No. 105) (DRPSAMF). Packgen responded to BP's objections on October 29, 2012. Packgen's Resp. to BP's Objections to Packgen's Additional Statements of Material Fact, Pursuant to Local Rule 56(e) (ECF No. 107) ( Pl.'s 56(e) Sur–Reply ).

With the Court's leave, Order (ECF No. 113), Packgen filed another statement of material facts on June 10, 2013. Packgen's Additional Statement of Material Facts Pursuant to Local Rule 56(c) (ECF No. 115) (PSAMF). BP responded on June 17, 2013. Defs.' Objections and Resps. to Packgen's Additional Statement of Material Facts Pursuant to Local Rule 56(c) (ECF No. 117) (DRPSAMF). Packgen replied on June 26, 2013. Packgen's Resp. to BP's Objections to Packgen's Additional Statements of Material Fact, Pursuant to Local Rule 56(e) (ECF No. 118) ( Pl.'s Second 56(e) Sur–Reply ).

The Court heard oral argument on June 26, 2013. Minute Entry (ECF No. 119). On June 27, 2013, Packgen submitted additional caselaw in response to the Court's questions at oral argument. Notice/Correspondence (ECF No. 120). In response to Packgen's post-argument submission and with the Court's approval, Order (ECF No. 123), BP filed a supplemental brief directed to the new caselaw that Packgen presented after oral argument. Defs.' Suppl. Br. (ECF No. 124).

B. The Facts

1. The Oil Spill

An oil drilling rig called Deepwater Horizon caught fire on April 20, 2010, sank, and began spilling an estimated 5000 barrels of oil a day into the Gulf Coast. DSMF ¶ 1; PRDSMF ¶ 1; PSAMF ¶ 1; DRPSAMF ¶ 1. By April 30, 2010, the oil spill spanned 600 square miles. PSAMF ¶ 2; DRPSAMF ¶ 2. Oil washed ashore on the Chandeleur Island of Louisiana on or about May 7, 2010. DSMF ¶ 2; PRDSMF ¶ 2. Federal and local officials declared states of emergency. DSMF ¶ 6; PRDSMF ¶ 6.

BP's response to the oil spill was multi-faceted and included the deployment of oil containment boom. DSMF ¶ 3; PRDSMF ¶ 3. Following the spill, BP had a critical need for millions of feet of 18? oil containment boom, but encountered challenges related to availability, production, and interconnectivity. PSAMF ¶ 4; DRPSAMF ¶ 4; DSMF ¶ 4; PRDSMF ¶ 4. BP explored numerous avenues for procuring containment boom. DSMF ¶ 5; PRDSMF ¶ 5. BP had no standard specification for boom at the time of the Gulf Spill.¹ PSAMF ¶ 3; DRPSAMF ¶ 3.

Given its critical need, BP placed large orders for boom with companies that were new to the boom manufacturing industry.² PSAMF ¶ 5; DRPSAMF ¶ 5. BP's procurement division was not buying boom to any specific specification. ³ PSAMF ¶ 6; DRPSAMF ¶ 6.

2. Packgen Sees an Opportunity

Packgen is a small Maine business that employs approximately thirty workers in its headquarters in Auburn, Maine.⁴ PSAMF ¶ 7; DRPSAMF ¶ 7. Packgen designs and manufactures composite packaging materials and containers for shipping and storage of materials used in the chemical, oil refining, and food processing industries. DSMF ¶ 7; PRDSMF ¶ 7. Packgen is a leading manufacturer and supplier of packaging containers that hold environmental materials. PSAMF ¶ 8; DRPSAMF ¶ 8.

Prior to April 2010, Packgen had never manufactured oil containment boom. DSMF ¶ 8; PRDSMF ¶ 8; PSAMF ¶ 10; DRPSAMF ¶ 10. Packgen's president and owner John Lapoint saw an opportunity both to help Packgen's business and to assist the necessary remediation in response to the national disaster. PSAMF ¶ 12; DRPSAMF ¶ 12. Packgen realized that it could manufacture boom by modifying its manufacturing operations for packaging containers. PSAMF ¶ 9; DRPSAMF ¶ 9.

In April and May 2010, Packgen applied its expertise using woven polypropylene in making packaging containers to create a manufacturing process that produced boom at a daily production rate far exceeding that of other boom manufacturers. PSAMF ¶ 11; DRPSAMF ¶ 11; DSMF ¶ 22; PRDSMF ¶ 22. Packgen began constructing boom manufacturing equipment no later than April 28, 2010—prior to discussions with BP.⁵ DSMF ¶¶ 19, 23; PRDSMF ¶¶ 19, 23. Prior to BP's visit, Packgen performed float tests on a small portion of boom which contained materials which would not be used in the final product. ⁶ DSMF ¶ 24; PRDSMF ¶ 24. At the time it began manufacturing boom, Packgen was confident that boom would become a permanent part of its business. ⁷ DSMF ¶ 72; PRDSMF ¶ 72.

3. Packgen's Initial Discussion With BP

By early May 2010, Dan Forte, a marketing consultant for Packgen, called Mario Araya, a BP employee who worked to procure boom for BP.⁸ DSMF ¶¶ 9–10; PRDSMF ¶¶ 9–10; PSAMF ¶ 13; DRPSAMF ¶ 13. Mr. Forte described Packgen's boom manufacturing capabilities and interest in assisting with the Gulf Coast cleanup; Mr. Araya explained that BP had an urgent need for as much as one thousand miles of boom.⁹ PSAMF ¶ 14; DRPSAMF ¶ 14; DSMF ¶ 20; PRDSMF ¶ 20. Mr. Araya made an oral commitment to Mr. Forte to purchase all present and future boom that Packgen produced for $21.75 per square foot, subject to a visit by BP personnel to inspect Packgen's facility and to certify Packgen's boom capacity.¹⁰ PSAMF ¶ 15; DRPSAMF ¶ 15; DSMF ¶ 25; PRDSMF ¶ 25. Given the urgency, Mr. Araya indicated that he would send a person from BP to Maine within one or two days. PSAMF ¶ 16; DRPSAMF ¶ 16.

4. May 11, 2010: Max Lyoen's Inspection

On May 11, 2010, almost three weeks after the explosion and oil spill, BP's Max Lyoen, a Supplier Quality Control Specialist, inspected Packgen's facility in Auburn, Maine, and met with several individuals, including Dan Forte, John Lapoint, and Don Roberts; Mr. Lyoen had no experience working with or evaluating boom.¹¹ PSAMF ¶ 17; DRPSAMF ¶ 17; DSMF ¶ 11; PRDSMF ¶ 11. At the time of Mr. Lyoen's visit, BP had no specification for boom other than the American Society for Testing and Materials (ASTM) standards; no specification for the decontamination of boom; no specification for the type of fabric required for boom; and had not performed any field tests on boom. ¹² PSAMF ¶¶ 18–19, 21–23; DRPSAMF ¶¶ 18–19, 21–23. There are multiple ways to manufacture boom to meet the ASTM standards. PSAMF ¶ 24; DRPSAMF ¶ 24. Mr. Lyoen was impressed that Packgen could produce 40,000 to 60,000 feet of boom per day, compared to the 8,000 to 10,000 foot daily output typical of other manufacturers.¹³ PSAMF ¶ 25; DRPSAMF ¶ 25. Mr. Lyoen stated that the type of end connectors used by Packgen to string boom...