Opinion
Case Number: 02-61440-CIV-MARTINEZ-KLEIN.
February 17, 2005
ORDER ON DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT
THIS CAUSE came before the Court upon Defendants' Motion for Summary Judgment (D.E. No. 49), filed on January 8, 2004, and Defendants' Motion for Summary Judgment on Liability (D.E. No. 167), filed on November 3, 2004. The motions have been fully briefed and are ripe for adjudication.
I. Relevant Factual and Procedural Background
These facts are taken from the statement of undisputed facts as set forth in the parties' Joint Pretrial Stipulation (D.E. No. 199), filed on February 11, 2005, unless cited otherwise.
Plaintiff Nigerian National Petroleum Corporation ("NNCP") is a corporation organized and existing under the laws of the Federal Republic of Nigeria ("Nigeria") with its principle place of business in Nigeria. Plaintiff Addax Petroleum Development (Nigeria) Ltd. ("Addax") is a corporation organized and existing under the laws of Nigeria with its principle place of business in Nigeria. The remaining Plaintiffs are subrogated insurers and reinsurers.
Nigeria has issued a series of oil prospecting licenses ("OPLs") to NNCP. NNPC, in turn, has entered into a series of either joint ventures or production sharing contracts for the exploration and production of the crude oil in the areas covered by the OPLs. One such OPL covers an area known at all times relevant to this action as OPL 98. OPL 98 is located in the far east of the Nigeria River Delta Region, off the mouth of the Calabar River. Originally, NNPC entered into a production sharing contract with Ashland Oil (Nigeria) for OPL 98, but that contract was cancelled in 1997. On May 6, 1998, NNPC entered into a production sharing contract with Addax (the "PSC") under which Addax was to undertake the exploration for and production of crude oil from OPL 98. The Mimbo Production Platform (the "Mimbo platform") and the two pipelines that are subject to this action are located within OPL 98.
In 1989, the two pipelines were installed and production from the Mimbo platform commenced. Crude oil flows southeast from the Mimbo platform through a 2.6 kilometer long, six-inch subsea pipeline to a tanker manifold mooring platform at the Antan Offshore Terminal (the "Antan Terminal") and from there to the permanently moored, floating, production, storage and off-loading vessel, "Knock Taggart." The gas associated with the oil produced at the Mimbo platform is similarly fed to the Antan Terminal through a four-inch subsea pipeline running adjacent to the six-inch pipeline.
Defendant Seabulk Merlin, Inc. ("Seabulk Merlin") is a corporation organized and existing under the laws of the Republic of the Marshall Islands (the "Marshall Islands"). Seabulk Merlin is the owner of the M/V Seabulk Merlin, an anchor handling tug supply vessel operating under the flag of the Marshall Islands. Defendant Seabulk Offshore Operators, Inc. ("Seabulk Offshore") is a corporation organized and existing under the laws of the State of Florida with its registered office in Fort Lauderdale, Florida. Seabulk Offshore is the manager and operator of the M/V Seabulk Merlin.
On June 29, 2000, Addax time chartered the M/V Seabulk Merlin from Seabulk Offshore under Contract No. PROD-2000-069 (the "time charter"), which is governed by and construed in accordance with the laws of Nigeria. The M/V Seabulk Merlin was chartered to Addax at all times relevant to this action. Addax chartered the M/V Seabulk Merlin to assist with tanker operations at the Antan Terminal and to assist with drilling operations in OPL 98.
Beginning in early September 2000, production at the Mimbo platform was periodically shut down to allow the drilling of additional wells by Noble Drilling using the drilling rig "Tommy Craighead." The M/V Seabulk Merlin participated in towing Tommy Craighead into position alongside the Mimbo platform in early September 2000. In October 2000, several supply vessels were operating in the 500 meter zone around Tommy Craighead. Pursuant to Addax's directions to service the drilling rig Tommy Craighead, these vessels were directed by Noble Drilling to anchor on the east side of the Mimbo platform (the port side of the Tommy Craighead). On or about October 13, 2000, while the time charter was still in effect, the two pipelines were found to be damaged, allegedly as a result of the negligent dropping or retrieving of an anchor by the M/V Seabulk Merlin. Compl., ¶¶ 28, 37. The location of the damage to the six-inch pipeline was found to be at a distance of approximately 270 meters from the Mimbo platform, at a heading of 298° from the southeast leg of the platform. Addax repaired the four-inch and the six-inch pipelines. NNPC, Addax and their insurers filed this lawsuit to recover for damages in connection with the accident. Neither NNPC nor Addax are seeking any recovery in this action; the sole claimants to any damages are the subrogated insurers and reinsurers.
In the first motion for summary judgment, Defendants contend the reciprocal indemnity provisions and the Himalaya clauses within the time charter control the issues of liability in this case, and that under the terms of these provisions, Addax and NNPC bear sole financial responsibility for damages to the two pipelines. (D.E. No. 49, at 3). In the second motion for summary judgment, Defendants seek summary judgment on liability and allege under the facts of the case, Plaintiffs cannot establish any material facts to show a breach of duty by Defendants or negligence or causation in fact or proximate cause linking the M/V Seabulk Merlin, or any other vessel in the area, with the damage discovered to the two pipelines. (D.E. No. 167, at 2-3).
II. Legal Standard
Under Rule 56(c) of the Federal Rules of Civil Procedure, a motion for summary judgment "shall be rendered forthwith 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 judgment as a matter of law." The Supreme Court stated that
In our view, the plain language of Rule 56(c) mandates entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Everett v. Napper, 833 F.2d 1507, 1510 (11th Cir. 1987). The Supreme Court has further stated that "Rule 56(c) therefore requires a non-moving 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.'" Celotex v. Catrett, 477 U.S. at 324. An issue of fact is "genuine" if the record taken as a whole could lead a rational trier of fact to find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248; Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). It is "material" if it might affect the outcome of the case under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. at 248.
III. Analysis
Defendants' first motion for summary judgment (D.E. No. 49) relates to the indemnity provisions of the time charter between Addax and Seabulk. The time charter provides for reciprocal indemnity, which states:
35.1 OWNER — Notwithstanding anything else contained in the TIME CHARTER, excepting clauses 8 AND 23, the CHARTERER shall not be responsible for loss or damage to the property of the OWNER and its SUBCONTRACTORS, including the VESSEL, nor for personal injury or death of the personnel of the OWNER or of its contractors and SUBCONTRACTOR(S) arising out of or in any way connected with the performance of this TIME CHARTER even if such loss, damage, injury, or death is caused wholly or partially by the act, neglect or default of the CHARTERER, ITS employees, contractors or SUBCONTRACTORS and even if such loss, damage, injury or death is caused wholly or partially by the unseaworthiness of any vessel and the OWNER shall indemnify, protect, defend and hold harmless the CHARTERER, or SUBCONTRACTOR(S) their employees from any and against all claims, costs, expenses, actions, proceedings, suits, demands and liabilities whatsoever arising out of or in connection with such loss, damage, liability personal injury or death.
35.2 CHARTERER — Notwithstanding anything else contained in the TIME CHARTER, the OWNER shall not be responsible for loss or damage to or any liability arising out of anything towed by the VESSEL, any cargo laden upon or carried by the VESSEL or her tow, the property of the CHARTERER or of its other contractors and SUBCONTRACTOR(S) including their offshore units or for personal injury or death of the employees of the CHARTERER or of its contractors and subcontractors other than the OWNER and its contractors and SUBCONTRACTOR(S) or of anyone on board anything towed by the VESSEL, arising out of or in any way connected with the performance of this TIME CHARTER even if such loss, damage, liability, injury or death is caused wholly or partially by the act, neglect or default of the OWNER, employees, contractors or subcontractors and even if such loss, damage, liability, injury or death is caused wholly or partially by the unseaworthiness of any vessel and the CHARTERER shall indemnify, protect, defend and hold harmless the OWNER, from any and against all claims, costs, expenses, actions, proceedings, suits, demands and liabilities whatsoever arising out of or in connection with such loss, damage, liability personal injury or death.
(D.E. No. 49, Ex. A). Defendants allege "the clear intent of such `reciprocal indemnity' clauses is that each party will bear its own losses without regard to which party may actually be responsible for the damage." Id. at 8.
Because the time charter is a maritime contract, the Court must apply federal maritime law. Armour Co. v. Fort Morgan S.S. Co., 270 U.S. 253, 259 (1926); Halliburton Co. v. Norton Drilling Co., 302 F.2d 431 (5th Cir. 1962), cert. denied, 374 U.S. (1963). Under federal maritime law, indemnity clauses are enforceable, provided that the indemnification is clearly and unequivocally expressed as the intent of the parties. See Roberts v. Williams-McWilliams Co., 648 F.2d 255, 264 (5th Cir. 1981); Hardy v. Gulf Oil Corp., 949 F.2d 826, 834 (5th Cir. 1992). In the case of reciprocal indemnity clauses, the reciprocity is not destroyed where the burden of one party differs from the corresponding burden of the second party. Diamond Offshore Co. v. AB Builders, Inc., 302 F.3d 531, 547-48 (5th Cir. 2002). According to its terms, the time charter is governed by and construed in accordance with the laws of Nigeria. The evidence provided to the Court establishes interpretation of the reciprocal indemnity clauses is the same under Nigerian law as under federal maritime law. Aff. of R. Olaopa, ¶¶ 4-6. Accordingly, the reciprocal indemnity clauses are not invalid or void as a matter of law. However, there are material issues of fact, which preclude the summary judgment sought by Defendants. These material issues of fact include, but not limited to: whether Addax was acting as NNPC's agent by virtue of the PSC, such that NNPC is subject to the terms of the time charter; and whether the damaged pipelines were Addax's property, such that the reciprocal indemnity clauses are applicable to this action. Therefore, Defendants' first motion for summary judgment (D.E. No. 49), is granted in part and denied in part.
In Bonner v. Pritchard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981.
The rule of Bisso v. Inland Waterways Corp., 349 U.S. 85 (1955), that a towboat may not contract against liability for negligent towage is restricted to towing cases. See. e.g., M.O.N.T. Boat Rental Serv., Inc. v. Union Oil Co., 613 F.2d 576 (5th Cir. 1980).
However, there is no indication in the record that Nigerian law would follow the Bisso rule.
In light of these disputed issues of material fact, the Court does not reach the issue of whether the Himalaya clause extends the obligations of the reciprocal indemnity clauses to NNPC.
Defendants' second motion for summary judgment relates to liability. (D.E. No. 167). Specifically, Defendants allege under the facts of the case, Plaintiffs cannot establish any material facts to show a breach of duty by Defendants or negligence or causation in fact or proximate cause linking the M/V Seabulk Merlin, or any other vessel in the area, with the damage discovered to the two pipelines. Id. at 203. Upon review of the fully briefed motion and related evidence, the Court finds there are multiple issues of material fact which preclude the summary judgment sought by Defendants. Accordingly, Defendants' Motion for Summary Judgment on Liability (D.E. No. 167) is denied. It is hereby:
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ORDERED AND ADJUDGED that
1. Defendants' Motion for Summary Judgment (D.E. No. 49) is GRANTED in part and DENIED in part.
2. Defendants' Motion for Summary Judgment on Liability (D.E. No. 167) is DENIED.
DONE AND ORDERED.