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In the Matter of the Complaint of Pride Offshore, Inc.

Date Decided: February 2nd, 2011
Originally Filed in: Texas (federal)
Decided by: Texas Southern District Court (Federal)
Court: United States District Court for the Southern District of Texas
Judge: Judge Rosenthal
Citation: 766 F.Supp.2d 797

Background:

This case arose out of damage to an underwater gas pipeline owned by Tennessee Gas Pipeline Co. ("TGPC") allegedly caused when a 250-foot jack-up rig owned by Pride Offshore, Inc. ("Pride") slipped its moorings during Hurricane Ike and settled on top of the pipeline. Century Exploration New Orleans, Inc. ("Century") is an operator of oil and gas production facilities on the outer continental shelf who had a contract with TGPC to transport oil and gas via the pipeline to onshore facilities.

Pride filed a complaint in exoneration or alternatively for limitation of liability in the United States District Court for the Southern District of Texas, pursuant to the Shipowners' Limitation of Liability Act.

Century filed a claim in the limitation proceeding seeking $21 million in economic-loss damages for interference with its operations. Century alleged that Pride was negligent in placing an unseaworthy rig on the sea floor, and that the resulting damage to the pipeline caused Century to shut down its production operations and sustain economic losses.

In response, Pride filed a Motion for Summary Judgment arguing Century could not succeed on its claim pursuant to the Robins Dry Dock Rule. Century responded with an amended claim that further alleged Pride acted recklessly and intentionally. Century also filed a Motion to Amend Complaint.

Before the Court is Pride's Motion for Summary Judgment and Century's Motion to Amend Complaint.


Issues:

Does Century's amended claim state facts and allegations sufficient to survive Pride's Motion for Summary Judgment?


Held:

No, the Court held that Century's amended claim did not sufficiently allege that Pride knew of the contractual relationship between Century and TGPC.

The Robins Dry Dock Rule, provides that an injured party may not recover economic-loss damages from an alleged tortfeasor (Pride) where the theory of recovery is based on the contractual relationship between the injured party (Century) and a third person (TGPC). However, in Nautilus Marine, Inc. v. Niemela, the Ninth Circuit articulated an exception to the Robins Dry Dock Rule. In Niemela, the Ninth Circut held that intentional interference with a contract allows the injured party to recover economic-loss damages provided the tortfeasor had knowledge of the contractual relationship.

Century's amended complaint alleges first that Pride intentionally placed an inadequate rig on the sea floor that it knew could not withstand hurricane force conditions; and second, because of Pride's extensive experience constructing rigs on the outer continental shelf, it knew a damaged rig had the potential to disrupt pipelines on the sea floor and cause oil production facilities like Century's to shut down.

The Court rejected Century's argument. It reasoned that Century's amended claim, though modified to include allegations of intentional and reckless conduct on the part of Pride, did not sufficiently allege that Pride had actual knowledge of the contractual relationship between Century and TGPC. Thus, it failed to satisfy the Niemela exception to the Robins Dry Dock Rule.

However, the Court granted Century's Motion to Amend Complaint allowing it two weeks to revise the complaint to include allegations that Pride had actual knowledge of the contractual relationship between Century and TGPC.

Motion for Summary Judgment GRANTED; Motion to Amend Complain GRANTED


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In the Matter of the Complaint of Pride Offshore, Inc.

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