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Valero Marketing and Supply Co. v. Southcap Pipe Line Co.

August 12, 2009

VALERO MARKETING AND SUPPLY COMPANY, ET AL., PLAINTIFFS,
v.
SOUTHCAP PIPE LINE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Donald G. Wilkerson United States Magistrate Judge

MEMORANDUM AND ORDER

Currently pending before the Court are Motions for Summary Judgment filed by the Plaintiffs (Doc. 118) and Defendant (Doc. 119). The Court heard oral argument on these motions on August 6, 2009. For the reasons set forth below, Plaintiffs' Motion for Summary Judgment is DENIED; Defendant's Motion for Summary Judgment is GRANTED in part and DENIED in part.

BACKGROUND

Plaintiffs Valero Marketing and Supply and Premcor Refining Group filed this lawsuit in August 2006, alleging that Defendant Southcap Pipe Line Company improperly removed 418,357 barrels of crude oil designated as Qua Iboe from Plaintiffs' inventory on Southcap Pipe Line (Doc. 108). Valero makes the following legal claims against Southcap:

Count I: Liability for loss of the oil under the Interstate Commerce Act ("ICA");

Count II: Liability for violation of the Filed Rate Doctrine under the ICA;

Count III: Unjust discrimination and preference, in violation of the ICA;

Count IV: Breach of Bailment Contract;

Count V: Conversion under Illinois law; and Count VI: Declaratory Judgment.

FACTS

The parties agree and the Court finds the following to be undisputed facts. Plaintiff Premcor Refining Group ("Premcor") is a crude oil refiner. In 2005, Plaintiff Valero Marketing and Supply Company, a subsidiary of Valero Energy Corporation, acquired Premcor's parent company, Premcor Inc., which made Plaintiff Premcor a wholly owned subsidiary of Valero Energy Corporation.

Defendant Southcap ("Southcap") is an interstate common carrier pipeline and one of five joint owners of the Capline Pipeline System ("Capline"), which provides transport of crude oil.*fn1 Southcap has a tariff on file with the Federal Energy Regulatory Commission ("FERC"). Premcor contracted with Southcap to ship crude oil on Capline during the period relevant to this lawsuit. Prior to acquisition by Valero, Premcor used Capline to transport crude oil for use in its Midwest refineries. After Valero acquired Premcor, Valero took control of crude oil movement and inventory.

The Capline pipeline runs from St. James Louisiana, to Patoka, Illinois. The Capline joint owners contracted with Shell Pipeline Company LP ("Shell") to manage the receipt, transportation, and delivery processes associated with Capline on behalf of Capline's common carriers. Shell kept records for Capline and issued documentation of crude oil movement in the Capline pipeline.

Under Southcap's tariff, a shipper must provide written notice, called a nomination, of the amount of crude the shipper intends to send on the carrier's space, the date upon which the crude is to be delivered, the location where it is to be delivered, and the final destination. The tariff further requires the shipper to identify "in writing the Crude Petroleum type, quality, quantity, and final destination ...


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