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Hornbeck Offshore Transportation, LLC v. Manitowoc Marine Group

February 11, 2008

HORNBECK OFFSHORE TRANSPORTATION, LLC, PLAINTIFF,
v.
MANITOWOC MARINE GROUP, LLC, DEFENDANT.



The opinion of the court was delivered by: Judge David H. Coar

MEMORANDUM OPINION AND ORDER

Plaintiff Hornbeck Offshore Transportation, LLC ("Plaintiff" or "Hornbeck") has brought suit against Defendant Manitowoc Marine Group, LLC ("Defendant" or "Manitowoc") under breach of contract, negligence, and strict liability theories. Now before this court are the motions for summary judgment of Defendant (Doc. No. 24) and Plaintiff (Doc. No. 28), both filed pursuant to Federal Rule of Civil Procedure 56. For the reasons stated below, Defendant's motion for summary judgment is GRANTED and Plaintiff's motion for partial summary judgment is DENIED.

1. FACTS

This case involves an agreement entered into between Hornbeck and Manitowoc, according to which Manitowoc was to construct a total of three tank barges intended for petroleum transport.

a. Contract Terms

On November 6, 2003, Plaintiff Hornbeck entered into a Contract with Manitowoc by which Manitowoc agreed to construct one "New Breed" 110,000 Barrel Tank Barge for Hornbeck. Parker Aff., Ex. D ("Contract"). Soon thereafter, Hornbeck exercised its option under the Contract to purchase two additional vessels from Manitowoc. The Contract incorporates by reference certain specifications and contract drawings for the vessels, both of which were prepared by Hornbeck. See Contract, art. 2.1; Parker Aff., Ex. M.

The specifications required that the cargo motors were, among other things, "suitable for operation in an intrinsically safe marine environment," explosion proof, and adequate for meeting the requirements of Institute of Electrical and Electronics Engineers Standard 45, "Recommended Practices for Electrical Installations on Ships" ("IEEE 45"). See Parker Aff., Ex. G at 89, 99 ("Specifications"). The IEEE-45 standards that were incorporated into the Contract require that motors exposed to the weather or located where they would be exposed to seas, splashing or other severe moisture conditions should be watertight or protected by watertight enclosures. See Pl.'s Facts Ex. 9 at 26 (Bryan Dep."). The contract documents dictated that the motors for the pumps were to be housed inside a motor room, shielded from the elements.

The Contract allows for changes to be made via a change order form. See generally Contract, art. 9. All such changes were to be performed "under applicable provisions of the Contract Documents." Id. art. 9.2.

The Contract's warranty provisions, of greatest importance to this matter, provide in most relevant part:

Art. 11.1: "Builder warrants to the Owner that all parts of the vessel, including materials, equipment and work fabricated by the Builder will be new, free from defects in workmanship and materials for a period of three hundred sixty-five (365) days, ...Builder will replace or repair such parts as may fail." ...

Art. 11.4: "Builder does not warranty any equipment or material purchased by Builder from a supplier or manufacturer for installation in the Vessels is free from manufacturer's defects and deficiencies. Where a standard commercial warranty is available, Builder agrees to transfer and assign any such warranties to Owner. If required by the Owner, the Builder shall furnish satisfactory evidence as to the kind and quality of materials and equipment." ...

Art. 11.7: voids any of Manitowoc's warranties with respect to "any material or equipment specified and/or furnished by Owner or any labor performed by others at the direction or request of Owner, including, but not limited to, design, specifications, and/or installation, and Builder specifically disclaims any warranties, expressed or implied, in connection with the foregoing."

Art. 11.8: "Builder shall not be liable for any defects in any engine, engine accessory, item of machinery, equipment, gear or fittings, or any other items manufactured by others, and Owner shall look to the manufacturer and supplier thereof for redress ... Provided, however, Builder shall warrant for three hundred sixty-five (365) days after the Delivery and acceptance of a Vessel that any installation and workmanship done by it to install any items manufactured by others shall be done in a workmanlike manner free and clear of all defects ... All previously stated terms and conditions of warranty repair and deductibles shall apply to this warranty." ...

Art. 12.1: "THE BUILDER MAKES NO GUARANTY OR WARRANTY BEYOND THOSE SPECIFIED IN THIS CONTRACT. THE WARRANTIES SET FORTH IN ARTICLE 11 ARE THE EXCLUSIVE WARRANTIES OF BUILDER AND BUILDER HEREBY DISCLAIMS ANY OTHER WARRANTIES OR GUARANTEES, WHETHER EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE."

The Contract also limits damages, stating that "[i]n no event shall Builder be liable to Owner or Owner's Indemnitees for consequential, incidental, special or indirect damages for any reason whatsoever other than as specifically provided in this Contract." Id., art. 12.2. Finally, the Contract dictates that the agreement "shall be governed by and construed in accordance with the laws of the State of Wisconsin." Id., art. 15.1.

b. Pump and Motor Change Order

In late July 2003, Plaintiff investigated with Stanley Shamosh ("Shamosh") of Shamosh Equipment Corp. ("Shamosh Equipment") the possibility of changing to a "pump-and-motor setup," in which the pump motor would be vertically mounted directly on top of the pump. This arrangement would move the motors outside of the motor room, obviating the need for a motor room but exposing the motors to the elements. Shamosh recommended to Hornbeck pumps manufactured by Leistritz Corporation ("Leistritz"). On December 11, 2003, Shamosh provided Hornbeck with a price quotation for two cargo pumps made by this manufacturer, along with the specifications for compatible vertically mounted motors. Manitowoc was not a part of these discussions between Hornbeck and Shamosh Equipment.

On December 12, 2003, Hornbeck requested that Manitowoc take steps to adopt the two Leistritz cargo pumps. After some discussion, the Contract was amended via a January 20, 2004 change order to place the pumps on deck with vertically mounted motors. Parker Aff., Ex. Q ("Change Order"). This change order form referenced and attached the quote from Shamosh Equipment. After the change order had been agreed upon, Manitowoc requested quotes via a purchase technical specification form outlining the technical demands for the equipment. Parker Aff., Ex. M ("PTS"). This PTS form was adjusted to conform to the technical specifications already provided by Shamosh Equipment. See Parker Aff., Ex. N. The PTS stated that the pump motors needed to be IEEE 45 above deck marine duty compliant. Id. at 6.

In response, Shamosh Equipment provided Manitowoc with the previously discussed Liestritz pumps, combined with motors manufactured by U.S. Electrical Motors ("U.S. Electric")*fn1 and distributed by Flowserve. In documentation provided to Shamosh, U.S. Electrical certified that the motors were IEEE 45 compliant. See Parker Aff., Ex. R. Shamosh, in turn, advised Hornbeck that "U.S. Electrical Motors have been used by [Shamosh] and others in the marine above-deck x-proof [explosion-proof] service, with very satisfactory results." Parker Aff., Ex. Contract at 4. Shamosh also provided the U.S. Electrical certification to Manitowoc.

c. Problems Following Delivery

Pursuant to the Contract and Change Order, Manitowoc constructed three barges for Hornbeck using the pump and motor configuration supplied by Shamosh Equipment; the ENERGY 11103, the ENERGY 11104, and the ENERGY 11105. The barges were substantially constructed in Sturgeon Bay, WI.

Plaintiff began to experience problems with some of the pump motors starting in August of 2005. In September of 2005, Hornbeck and Manitowoc resolved an issue regarding an "overtorqued adjusting nut" on one of the motors. On January 13, 2006, Plaintiff contacted Shamosh and Manitowoc regarding "numerous failures" with one of these motors. See Parker Aff., Ex. V. Throughout this period, Hornbeck communicated "directly and regularly with Shamosh and U.S. Electric[al] regarding its investigation into the alleged problems with the cargo pumps." Manitowoc's Facts ¶ 58.

In a letter dated May 9, 2006, U.S. Electrical advised Shamosh that, contrary to its original certification, the motors it had provided did not meet IEEE 45 requirements, and that failure of the motors could be attributed to "severe moisture conditions." Parker Aff., Ex. BB. The letter also states that the motors used could never have been independently watertight, and instead needed to have been housed in a watertight enclosure in order to comply with the ...


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