Thorn's Diesel Service v. Houston Ship Repair

• Decision Date: 26 November 2002
• Docket Number: No. CIV.A.01-A-1088-N.,CIV.A.01-A-1088-N.
• Parties: THORN'S DIESEL SERVICE, INC., Plaintiff, v. HOUSTON SHIP REPAIR, INC., and the United States of America, Defendants.
• Court: U.S. District Court — Middle District of Alabama

233 F.Supp.2d 1332

THORN'S DIESEL SERVICE, INC., Plaintiff, v. HOUSTON SHIP REPAIR, INC., and the United States of America, Defendants.

No. CIV.A.01-A-1088-N.

United States District Court, M.D. Alabama, Northern Division.

November 26, 2002.

Richard A. Lawrence, Montgomery, AL, for Thorn's Diesel Service, Inc., plaintiff.

Thomas O. Deen, McFatridge Baker & Deen PC, Houston, TX, for Houston Ship Repair, Inc., defendant.

Kenneth E. Vines, U.S. Attorney's Office, Montgomery, AL, Michael A. DiLauro, U.S. Department of Justice, Torts Branch, Civil Division, Washington, DC, Robert D. McCallum, Jr., U.S. Department of Justice, Civil Division, Washington, DC, for United States of America, defendant.

MEMORANDUM OPINION

ALBRITTON, Chief Judge.

Introduction

This cause is before the court on Defendant Houston Ship Repair, Inc.'s ("Houston") Motion for Partial Summary Judgment (Doc. # 34), and Defendant United States of America's Motion for Summary Judgment (Doc. # 35), both filed on August 16, 2002. Plaintiff Thorn's Diesel Service, Inc. ("Thorn's") filed this action in this court on September 12, 2001, and charged Houston with breach of contract and the United States with liability under the Maritime Commercial Instruments and Liens Act ("MCILA"), 46 U.S.C. §§ 31301-43. Houston filed a counterclaim against Thorn's on November 13, 2001, alleging breach of contract by Thorn's. On July 15, 2002, Houston cross-claimed against the United States (Doc. # 27) and sought indemnity from the United States in the event Houston was found liable to Thorn's. In turn, the United States filed a cross-claim against Houston on July 24, 2002, (Doc. # 31) seeking indemnification in the event that the United States is found liable to Thorn's. The Motion finally came under submission on November 12, 2002.

After reviewing the submissions of the parties, the court concludes that Houston's Motion for Partial Summary Judgment is due to be DENIED and that the United States' Motion for Summary Judgment is due to be DENIED.

Summary Judgment Standard

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The party asking for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the `pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323, 106 S.Ct. 2548. The movant can meet this burden by presenting evidence showing there is no dispute of material fact, or by showing, or pointing out to, the district court that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Id. at 322-24, 106 S.Ct. 2548.

Once the moving party has met its burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by [its] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S.Ct. 2548. To avoid summary judgment, the nonmoving party "must do more than show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). On the other hand, the evidence of the nonmovant must be believed and all justifiable inferences must be drawn in its favor. See Anderson v. Liberty Lobby, 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). After the nonmoving party has responded to the motion for summary judgment, the court must grant summary judgment if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).

Facts

The facts as presented in the submissions of the parties, viewed in a light most favorable to the nonmovant, are as follows:

The Contracts

The United States entered into a contract with InterOcean Ugland Management Corporation ("Ugland") for the maintenance of the S.S. Mount Washington, a Reserve Ready Force Ship. The contract price was $1,800,600. The parties amended this contract to include, at no additional cost, the conversion of two LCM-6 boats.¹ Ugland would convert one LCM-6 into a dive boat and the other into a tow boat. The United States Department of Transportation, Maritime Administration administered the contract.²

In November of 2000, Ugland entered into a subcontract with Houston to perform the conversion work on the two LCM-6 boats. The contract price was $1,050,983. The Maritime Administration's document entitled "Specifications for OPDS Utility Boats (OUB) Repair and Conversion Specifications", RFP # 00-G-246-028 was the contract document that governed Houston's work under the contract. Under Article 7 of the contract Ugland would not be responsible for any additional charges beyond the contract price incurred by Houston that were not approved in a written order by Ugland's Port Engineer Rick Bullock. Bullock was Ugland's authorized representative at Houston's shipyard in Orange, Texas. As Ugland's Port Engineer for the S.S. Mt. Washington, Bullock was also the United States' representative for the ship and for the United States-Ugland contract to modify and repair the two LCM-6's assigned to the Mt. Washington.

Under its contract with Ugland, Houston's obligation to perform the conversions on the two LCM-6's included rebuilding and repairing the diesel engines and transmissions that power the LCM-6's.³ Houston would remove the four engines from the LCM-6's and would receive four more from other sources, and, from those, six new rebuilt engines and transmissions would be used for the LCM-6 conversion process. Each LCM-6 would receive two of the rebuilt engines and transmissions, and the final two rebuilt engines and transmissions would be used as spares. Two of the original eight engines would be utilized for spare parts in the rebuilding process.

In December of 2000, Houston subcontracted with Thorn's in Montgomery, Alabama, for the rebuilding and repairing of the diesel engines and transmissions. The contract price was $29,900 for each of the six engines and transmissions, for a total of $179,400. Paragraph 2(F) of the Houston-Thorn's contract stated that "[e]ngine overhauls [will be] performed in compliance with specifications received from Houston Ship Repair Inc. (U.S.Navy)." Those specifications and the parties' compliance or noncompliance with them are at the heart of this litigation. The specifications at issue came from the contract specifications found in the Ugland-Houston contract (RFP # 00-G-246-028). Paragraph 2(F) of the Houston-Thorn's contract incorporated those specifications by reference.

The contract (RFP # 00-G-246-028) called for two inspections by Bullock at separate points during the rebuilding process. Pursuant to sections 314.4.5.3 and 451.4.5.2, the first inspection was to occur once the engines arrived at Thorn's and were disassembled and the parts cleaned with a high pressure wash. The second inspection, pursuant to sections 314.4.5.4,⁴ 315.4.1.4,⁵ and 451.4.5.6⁶ was to occur when all of the engine parts were disassembled, inspected by Thorn's, and carefully checked for any defects or deviations from the manufacturer's recommendations. For the second inspection, Thorn's was to prepare and submit a written report to Bullock concerning the "as found" condition of the eight engines. Under the contract, Thorn's was not to proceed any further on the rebuilding process until Bullock inspected the engines and the parts and signed-off on any further repairs or purchases of new parts for the engines. Bullock's inspection and approval were necessary prerequisites to Thorn's purchasing any new parts for use in the rebuilt engines and transmissions.

The Houston-Thorn contract also contained provisions concerning the obligations of the parties in the event that parts from the eight engines were damaged or unusable. Paragraph 9(A) stated that "[b]asic overhaul price (engine & [transmission]) is valid subject to all major castings and components of engines and transmissions received by [Thorn's] for overhaul being non-damaged and useable or serviceable." Paragraph 9(B) stated that Thorn's "will back charge at fleet price⁷ for non-useable engine and transmission parts and components and missing parts." In fact, the contract price of $29,000 per engine was based on the condition that all parts from the eight engines would be reusable. Leonard Eitelbach, Vice President Government Contracts for Houston, testified in his deposition that he understood that Houston would be responsible for back charges in the event that some of the parts removed from the eight engines were damaged or unusable and had to be replaced. Eitelbach Deposition, p. 11, lines 10-15.

The Actions of the Parties

After Houston and Thorn's agreed to their contract, the eight engines and transmissions were shipped to Thorn's Montgomery shop. Houston forwarded one-half of the contract price, or $89,700, to Thorn's pursuant to the contract terms. Thorn's began work on the disassembly, cleaning, and evaluation of the engines, the transmissions, and the component parts. On February 1, 2001, Bullock and Houston employees Virgil Harrell and Ronald Reese visited Thorn's shop in Montgomery. They conducted the first inspection required under sections 314.4.5.3 and 451.4.5.2 of the contract. According to the deposition testimony of Alan Baugher, manager...