A dredging company sued along with the U.S. government and ultimately hit with a nearly $14 million bench verdict for damaging an oil pipeline in the Gulf of Mexico can’t recover $5.9 million in indemnity from the government, a federal judge has ruled.
Weeks Marine paid out the entire $13.9 million judgment to Contango Operators Inc., a company it contracted with to build an underwater pipeline along with the U.S. Army Corps of Engineers. The government was found 60 percent negligent and Weeks 40 percent negligent for damage done to a Contango pipeline by a Weeks’ vessel accidentally dredging over it.
The court ordered the government to reimburse Weeks $8 million for its share of the damages. Weeks subsequently sued the government for the remaining $5.9 million claiming the government negligently failed to inform it of the location of the pipeline.
However, U.S. District Judge Sim Lake of the Southern District of Texas wrote in his Oct. 31 opinion that Weeks mischaracterized a contractual claim as a negligence claim.
Citing a 2014 opinion in the case, Lake said, “Any claim that the USA was negligent for failing to inform Weeks Marine about the pipeline is essentially contractual. If the USA breached a duty by failing to include information in the contract, such a duty would be based in the contractual relationship, and a breach would have occurred by a failure to include the information in the contract.”
He continued, “Any claim that the USA was negligent for failing to inform Weeks Marine about the pipeline after the contract was signed similarly would involve a duty based in the contract — even if other duties might be implicated as well and a breach consisting of a failure to supply information that should have been included in the contract.”
As for whether Weeks was entitled to indemnity for any contractual claims, Lake found Weeks’ arguments unconvincing.
Weeks argued that the the government’s omission of the location of the pipeline in the contract was a positive assertion, or a representation on which it justifiably relied, and that the absence of the pipeline led to Contango’s injuries.
“The omission of the pipeline by the Corps may have been a positive assertion and was one cause of Contango’s injury,” Lake said, “but as the court previously held, Weeks Marine did not ‘justifiably’ rely on it. Weeks Marine possessed information about the Contango pipeline that it could have used to avoid striking the pipeline.”
Lake added, citing language from the 2014 opinion, “‘Weeks Marine’s sole reliance on information provided by the Corps did not satisfy its duty in this case to exercise reasonable care in its dredging operations.’”
Matthew F. Popp of Waits, Emmett & Popp in New Orleans represented Weeks and declined to comment. Peter G. Meyer of U.S. Department of Justice Civil Division represented the government and did not respond to a request for comment.