Beverly Dredging, L.L.C. v. FMT Shipyard & Repair, LLC

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

BEVERLY DREDGING, L.L.C. CIVIL ACTION

VERSUS No. 23-1469

FMT SHIPYARD & REPAIR, LLC ET AL. SECTION I

AMENDED ORDER & REASONS

Before the Court are defendants Boland Maine & Industrial, LLC’s (“Boland”)

and FMT Shipyard & Repair, LLC’s (“FMT”) motions1 for summary judgment.

Plaintiff Beverly Dredging, LLC (“Beverly”) opposes2 these motions, and FMT

opposes Boland’s motion for summary judgment with respect to FMT’s claims against

Boland.3 Boland and FMT each filed replies4 to the responses in opposition to their

respective motions. For the reasons that follow, the Court grants Boland’s motion.

The Court grants FMT’s motion in part and denies it in part.

I. FACTUAL BACKGROUND

Beverly owns and operates the dredge BELLA ROSE.5 During Hurricane Ida,

in August 2021, the BELLA ROSE broke free from its moorings and partially sank in

the Mississippi River.6 The vessel was salvaged and towed to FMT to undergo

1 R. Doc. No. 56 (Boland’s motion); R. Doc. No. 57 (FMT’s motion).

2 R. Doc. No. 61.

3 R. Doc. No. 60.

4 R. Doc. No. 63 (FMT’s reply); R. Doc. No. 64 (Boland’s reply).

5 R. Doc. No. 7, at ¶ 7.

6 Id. at ¶¶ 10–11.

repairs.7 Beverly alleges that it entered into a “Repair Contract” with FMT, which

“obligated FMT to among other things inspect and rebuild the [j]et [p]ump and

[h]ydraulic [s]ystem on the BELLA ROSE.”8 The hydraulic system referenced in the

complaint was the Metso T46WD Thomas Simplicity Dredge Pump (“Metso pump”).9

FMT selected Boland as a subcontractor to inspect the Metso pump.10 Beverly’s

complaint asserts that, in January 2022, the Metso pump was transported by FMT

to Boland’s machine shop to be rebuilt.11 Boland’s inspection revealed damage to the

Metso pump, including cavitation and cracks in the pump’s 46” impeller.12

Boland contacted the Metso parts distributor and received an email on January

12, 2022 that there was a 125-day lead time to receive a new impeller.13 Boland also

claims that it had the Metso pump tested to determine whether the impeller could be

repaired with welding or whether it was made from a substance known as “white

iron,” which cannot be repaired with welding.14 On January 13, 2022, Boland states

that it received written confirmation that the impeller was made of “white iron” and

could not be repaired with welding.15 Boland claims that its representatives asked

Beverly employees whether it had a spare impeller but was informed that it did not.16

7 Id. at ¶ 12.

8 Id. at ¶ 13.

9 R. Doc. No. 56-2, at ¶ 12.

10 R. Doc. No. 57-10, at 1.

11 R. Doc. No. 7, at ¶ 19.

12 R. Doc. No. 56-2, at ¶ 16.

13 Id. at ¶¶ 18–19.

14 Id. at ¶ 17.

15 Id. at ¶¶ 20–21.

16 Id. at ¶28.

Boland also states that it contacted the Metso pump manufacturer to inquire

about a repair alternative to welding.17 The manufacturer informed Boland that an

epoxy coating could temporarily repair this type of impeller.18 Boland’s

representative Walter Haley testified in a written declaration that he “informed

FMT’s Project Manager, David Cascio, of: (i) the metallurgical test results for the

Metso Pump impeller, (ii) the unavailability of welding on the impeller as a repair

option, (iii) the 125-day lead time for a new impeller, (iv) the unavailability of spare

impeller from Beverly, and (v) the option of a temporary epoxy repair on the

impeller.”19

David Cascio testifies in his deposition that he discussed the lead times for

obtaining a replacement impeller with Beverly’s representative, Ronnie Schmitt, and

that this lead time was unacceptable to Beverly.20 Beverly claims that neither FMT

nor Boland informed Beverly that the epoxy repair was intended to be temporary.21

In January and early February of 2022, the parties exchanged a series of

emails including quotes and estimates for the work on the Metso pump. Boland sent

its price quotes and time estimate of four to five weeks for the repairs to FMT.22 FMT

17 Id. at ¶ 22.

18 Id.

19 R. Doc. No. 56-4, at ¶ 22.

20 R. Doc. No. 57-7, at 6–8.

21 R. Doc. No. 61, at 4.

22 See R. Doc. No. 56-8; R. Doc. No. 56-10, at 2–4.

emailed its quotes to Beverley.23 And FMT sent its purchase orders and requests to

“start on the work” to Boland.24

Boland completed its work on the Metso pump in March 2022.25 The Metso

pump was returned to FMT’s yard, where FMT installed it aboard the BELLA

ROSE.26 FMT then completed its repairs on the BELLA ROSE on or about July 15,

2022, and the vessel was returned to Beverly on or about July 16, 2022.27 FMT

asserts that it had no further “hands-on involvement” with the BELLA ROSE after

that date.28

Beverly then contends that the BELA ROSE encountered a series of problems

almost immediately upon return to work.29 Beverly alleges that, on July 25, 2022, the

Metso pump’s packing was leaking water and sand and that there were two broken

ring bolts, requiring dredge operations to be shut down.30 The captain of the BELLA

ROSE, Justin Pajeaud (“Captain Pajeaud”), testified in his deposition that he

repaired the packing and the brass ring bolts within one hour, whereupon the dredge

resumed normal operations.31 Captain Pajeaud further testified that changing the

23 See R. Doc. No. 56-9.

24 See R. Doc. No. 56-10, at 3–4.

25 R. Doc. No. 56-2, at ¶ 53.

26 R. Doc. No. 57-1, at 3; R. Doc. No. 56-2, at ¶ 53.

27 R. Doc. No. 7, at ¶¶ 21–22; R. Doc. No. 57-1, at 3.

28 R. Doc. No. 57, at 1.

29 See R. Doc. No. 61, at 4.

30 Id.

31 R. Doc. No. 57-6, at 7–9.

packing is a part of the crew’s routine dredge maintenance whenever too much water

comes through the bilge.32

Beverly claims that, in a second incident on September 25, 2022, the BELLA

ROSE had problems with the thrust bearing box of the Metso Pump, including broken

bolts and damaged seals.33 Beverly’s complaint states that on or about October 5,

2022, Beverly brought the BELLA ROSE to Boland for assessment and repair.34 In

addition to the seals and bolts, Boland claims that it “found several deficiencies in

the installation and mounting of the Caterpillar engine and reduction gear box” and

found that the drive system was out of alignment.35 Boland states that it repaired

the seals and realigned the drive system.36 But Boland claims that the dredge left

Boland’s facility early, on October 11, 2022, without an opportunity to test the dredge

according to its normal procedure or do final adjustment on the labyrinth seals.37

Beverly asserts that, shortly after the BELLA ROSE resumed work, the crew

noticed a seal spinning on the shaft.38 Beverly states that it called Boland, whose

personnel came out to fix the issue.39 Boland asserts that their personnel made the

necessary adjustments to the labyrinth seals,40 and the BELLA ROSE returned to

32 Id. at 5–6.

33 R. Doc. No. 61, at 5.

34 R. Doc. No. 7, at ¶ 33.

35 R. Doc. No. 56-2, at ¶¶ 71–73.

36 Id. at ¶ 74.

37 R. Doc. No. 56-1, at 10–11.

38 R. Doc. No. 61, at 5.

39 Id.

40 R. Doc. No. 56-1, at 10.

normal operation.41 Boland also submits a video taken by its personnel on October

12, 2022 while aboard the vessel.42 Boland describes the video as showing the Metso

pump system operating normally and without excessive vibration as well as showing

water emanating from the packing gland of the Metso pump and spraying onto the

radial bearing assembly.43

Boland sent its invoice for the work related to the second incident to FMT on

October 25, 2022 along with strong recommendations to repair the engine

foundation.44 FMT paid the invoice.45 Beverly alleges that FMT did not follow

Boland’s recommendations.46

In the final incident, Beverly states that the front/radial bearings nearest to

the Metso pump failed on October 22, 2022 and had to be returned to Boland for

repairs on October 28, 2022.47 Boland believed that lack of lubrication caused the

problem and that the lubrication had been washed out by the mixture of water and

sand emanating from the packing.48 Boland recommended that Beverly replace the

damaged pedestal radial bearing assembly and install a protective shield (known as

41 R. Doc. No. 61, at 5.

42 R. Doc. No. 56-15 (manual attachment).

43 See R. Doc. No. 56-1, at 10.

44 R. Doc. No. 56-14.

45 R. Doc. No. 56-1, at 11–12.

46 R. Doc. No. 60-1, at 1–2.

47 R. Doc. No. 61, at 5.

48 Id. at 5; R. Doc. No. 56-2, at ¶ 83.

a slinger ring) to help maintain lubrication.49 Boland further recommended that

Beverly replace the impeller.50

Beverly brought the above captioned suit against FMT and Boland claiming

that “[t]he work performed by FMT and its subcontractors, including Boland, was

negligent, grossly negligent, substandard and not performed in a good workman like

manner.”51 Beverly made claims for breach of contract, negligence, breach of the

warranty of workmanlike performance, and breach of the implied duty of good faith

and fair dealing.52 Beverly does not claim damages to persons or any property other

than the Metso pump.53 FMT filed counterclaims against Beverly for unpaid services

and crossclaims against Boland for breach of contract, negligence, indemnity, and

contribution.54

II. STANDARD OF LAW

Summary judgment is proper when, after reviewing the materials in the

record, a court determines that there is “no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “[A]

party seeking summary judgment always bears the initial responsibility of informing

the district court of the basis for its motion, and identifying those portions of [the

record] which it believes demonstrate the absence of a genuine issue of material fact.”

49 R. Doc. No. 56-2, at ¶ 92.

50 Id.

51 R. Doc. No. 7, at ¶ 24.

52 Id. at 1.

53 See generally id.

54 R. Doc. No. 8, at 17–21.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary

judgment need not produce evidence negating the existence of a material fact; it need

only point out the absence of evidence supporting the other party’s case. Id.; see also

Fontenot v. Upjohn Co., 780 F.2d 1190, 1195–96 (5th Cir. 1986) (“There is no sound

reason why conclusory allegations should suffice to require a trial when there is no

evidence to support them even if the movant lacks contrary evidence.”).

Once the party seeking summary judgment carries that burden, the

nonmoving party must come forward with specific facts showing that there is a

genuine dispute of material fact for trial. See Matsushita Elec. Indus. v. Zenith Radio

Corp., 475 U.S. 574, 587 (1986). The showing of a genuine dispute is not satisfied by

creating “‘some metaphysical doubt as to the material facts,’ by ‘conclusory

allegations,’ by ‘unsubstantiated assertions,’ or by only a ‘scintilla’ of evidence.” Little

v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). Rather, a

genuine dispute of material fact exists when the “evidence is such that a reasonable

jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986).

If the movant’s story is “blatantly contradicted by the record”—including a

videotape—such that “no reasonable jury could believe it,” the court should “view[]

the facts in the light depicted by the videotape.” Scott v. Harris, 550 U.S. 372, 380–

81 (2007). If the nonmovant fails to meet its burden of showing a genuine issue for

trial that could support a judgment in favor of the nonmovant, summary judgment

must be granted. See Little, 37 F.3d at 1075–76.

The party responding to the motion for summary judgment may not rest upon

the pleadings but must identify specific facts that establish a genuine issue.

Anderson, 477 U.S. at 248. The nonmoving party’s evidence, however, “is to be

believed, and all justifiable inferences are to be drawn in [the nonmoving party’s]

favor.” Id. at 255. If the nonmovant fails to meet its burden of showing a genuine

dispute for trial that could support a judgment in favor of the nonmovant, summary

judgment must be granted. See Little, 37 F.3d at 1075–76.

III. ANALYSIS

a. The Economic Loss Rule

Boland first argues that Beverly’s tort claims against it are barred by the

economic loss rule55 as outlined in East River Steamship Corp. v. Transamerica

Delaval, Inc., 476 U.S. 858 (1986).

In East River, the plaintiffs chartered ships built by Shipbuilding. East River,

476 U.S. at 859–60. Shipbuilding, in executing its contract, contracted with a turbine

manufacturer to “design, manufacture, and supervise the installation of turbines.”

Id. at 859. After the plaintiffs purchased the ships, they began to experience problems

with the ship’s turbines, causing them to not function properly and causing damage

to other parts of the turbine. Id. at 859–61. The plaintiffs brought tort claims against

the turbine manufacturer under a theory of products liability. Id. at 861. While the

U.S. Supreme Court recognized products liability claims under maritime law, this

acknowledgement was limited. See id. at 865.

55 R. Doc. No. 56, at 16.

To preserve the distinction between tort claims under products liability and

warranty claims under contract, the Supreme Court stated that tort claims under

products liability must generally involve either personal injuries or injuries to “other

property.” Id. at 866–67. In contrast, when a product fails to function properly in a

way that damages only the product itself, that claim is more properly brought under

warranty. Id. at 867–68. “Even when the harm to the product itself occurs through

an abrupt, accident-like event, the resulting loss due to repair costs, decreased value,

and lost profits is essentially the failure of the purchaser to receive the benefit of its

bargain—traditionally the core concern of contract law.” Id. at 870. The Supreme

Court therefore announced the economic loss rule and held that, pursuant to federal

maritime law, “a manufacturer in a commercial relationship has no duty under either

a negligence or strict products-liability theory to prevent a product from injuring

itself.” Id. at 871.

In outlining what could qualify as “other property” sufficient to sustain a tort

claim, the East River court considered the entire turbine “a single unit” and did not

distinguish between various parts of the turbine unit. Id. at 867. The other parts of

the turbine that were damaged therefore did not constitute other property. “Since all

but the very simplest of machines have component parts, [a contrary] holding would

require a finding of ‘property damage’ in virtually every case where a product

damages itself. Such a holding would eliminate the distinction between warranty and

strict products liability.” Id. (quoting Northern Power & Engineering Corp. v.

Caterpillar Tractor Co., 623 P.2d 324, 330 (Alaska 1981)).

In Employers Insurance of Wausau v. Suwannee River Spa Lines, Inc., 866 F.2d

752, 755 (5th Cir. 1989) (“Employers Insurance”), the Fifth Circuit extended the

economic loss rule announced in East River to contracts for professional services

“rendered as part of the construction of a vessel.”

The plaintiffs in Employers Insurance contracted with various parties to

construct a tugbarge. Id. at 755–56. On its second voyage, the tug encountered rough

waters, and the crew noticed damage to the linkage system connecting the tug to the

barge. Id. at 756. This caused the barge to move against the hulls of the tug,

ultimately opening large holes in the hulls and causing the tug to sink. Id. The

plaintiffs sued the construction supervisor and designer of the tug, alleging breach of

contract as well as negligent performance of the contract. Id. at 756–57. On appeal,

the Fifth Circuit extended East River to service contracts and precluded plaintiff’s

negligence claims, noting that this was necessary to preserve the economic loss rule.

Id. at 765–66. “To hold otherwise would allow a plaintiff who contracts separately for

‘services’ related to the manufacturing process . . . to recover in tort for purely

economic losses . . . while East River would bar any similar recovery in cases in which

those same services are performed by the manufacturer itself.” Id. at 766.

Finally, in Nathaniel Shipping Inc. v. General Electric Co., 920 F.2d 1256 (5th

Cir. 1991) (hereinafter “Nathaniel Shipping I”), the Fifth Circuit applied the economic

loss rule to a contract for repairs where the only injury complained of was “delay in

getting [ the plaintiff’s] ship fixed.” Nathaniel Shipping I, 920 F.2d at 1264–65. The

court applied this rule even though the shipowner had no contractual relationship

with the subcontractor that performed the complained-of repair. Id. at 1265. In

holding that privity was not required to apply the economic loss rule, the Fifth Circuit

noted that the parties in East River also lacked contractual privity. Id.

In addition to clarifying the types of contracts to which East River applies, the

Fifth Circuit has also clarified how to determine whether property damage is to “other

property” and therefore sufficient to support a tort claim at admiralty. The court in

Shipco 2295, Inc. v. Avondale Shipyards, Inc., 825 F.2d 925 (5th Cir. 1987) held that

the proper test for this question was to look to the “object of the contract or bargain

that governs the rights of the parties.” Shipco, 825 F.2d at 928. Because the plaintiffs

in that case entered contracts for the construction of completed vessels and “did not

bargain separately for individual components of each vessel,” the court held that

“completed vessels were obviously the objects of the contract.” Id. The plaintiffs were

therefore limited to their contractual claims when the complaint alleged that some

components of the vessel caused damage to other components. Id. at 929. The court

explained that to hold otherwise “would undermine this central objective of East

River that the parties receive the benefit of their bargain” and would “give the buyer

greater rights to recover economic losses for [defects]” when the “component is

designed, constructed, or furnished by someone other than the final manufacturer.”

Id. at 928–29.

The Fifth Circuit has reaffirmed the Shipco-type analysis on several occasions.

See, e.g., Nicor Supply Ships Assocs. v. General Motors Corp., 876 F.2d 501, 505–06

(5th Cir.1989) (holding that seismic equipment brought aboard a year after executing

a contract for purchase of the vessel was “other property” that could support a tort

claim because it was not originally bargained for under the purchase contract);

Petroleum Helicopters, Inc. v. Avco Corp., 930 F.2d 389, 390–91, 393 (5th Cir. 1991)

(holding that, because a removable floatation device was installed inside a helicopter

before the purchase contract, the floatation device was part of the helicopter and the

helicopter therefore was not “other property” sufficient to support a tort claim); Smith

Mar., Inc. v. L/B KAITLYN EYMARD, 710 F.3d 560, 563–65 (5th Cir. 2013) (holding

that, because the plaintiff purchased the vessel and contracted for installation of

additional living quarters in the same contract, damage to the living quarters caused

by an improperly mounted crane on the ship was not damage to “other property”).

Here, Beverly’s contracts are service contracts for repairs and are encompassed

within the class of contracts to which East River applies pursuant to the Fifth

Circuit’s holdings in Employers Insurance and Nathaniel Shipping I. The economic

loss rule applies where the alleged negligence is committed by a subcontractor with

whom the plaintiff lacks any contractual privity in accordance with Nathaniel

Shipping I. While Beverly argues that Louisiana law has abandoned a mechanical

application of the economic loss doctrine,56 courts may only apply state law to

maritime claims “where it serves to supplement, but not contravene, the general

maritime law by filling a ‘gap’ therein.” Parekh v. Argonautica Shipping Invs. B.V.,

2017 U.S. Dist. LEXIS 127800, at *6 (E.D. La. Aug. 11, 2017) (Morgan, J.). Federal

maritime law is clear on this point and cannot be supplemented with conflicting state

56 R. Doc. No. 61, at 12–13.

law. The fact that this case involves a contract for repairs and that both Beverly and

Boland deny any contractual privity,57 then, will not foreclose East River’s

applicability.

Beverly does not allege any personal injuries or damage to property other than

the Metso Pump.58 Instead, Beverly alleges that negligent performance by FMT and

Boland in repairing certain components of the Metso pump caused damage to other

components of the Metso pump.59 These damages do not qualify as damage to “other

property” pursuant to a Shipco analysis. Beverly’s bargain was for the repair of its

ship. Though Beverly and FMT may have bargained over which parts of the ship

would be fixed, the quote for repairs did not distinguish between different components

of the Metso pump. Instead, the line item for the repair to the Metso pump read

“Thompson 20[ inch] Suction Head Rebuild” and referred to the Metso pump as a

single unit.60 The alleged failure of FMT and Boland to deliver Beverly the benefits

of its bargain are properly brought as a contract claim. Therefore, Beverly’s tort

claims against Boland and FMT will be dismissed along with FMT’s tort claims

against Boland.

Accordingly, FMT’s claim against Boland for contribution must also be

dismissed. Claims of contribution require showing of a breach of duty by a joint

tortfeasor. Conti 11. Container Schiffahrts-GmbH & Co. v. New Orleans Terminal,

57 See R. Doc. No. 56-1, at 1; R. Doc. No. 61, at 15.

58 See generally R. Doc. No. 7.

59 Id. at ¶ 24; R. Doc. No. 61, at 3–5.

60 See R. Doc. No. 7-1, at 8.

LLC, 2016 U.S. Dist. LEXIS 12738, at *19 (E.D. La. 2016) (Barbier, J.). Because all

tort claims have been dismissed, FMT’s claims for contribution must also be

dismissed.

b. Indemnity

i. Tortious Indemnity and the Implied Warranty of Workmanlike

Performance

Boland next asserts that it is entitled to summary judgment with respect to

Beverly’s claims for breach of the implied warranty of workmanlike performance

because of the lack of contractual privity with Boland.61 FMT likewise asks this Court

to dismiss all of Beverly’s claims against it.62 Beverly responds that, pursuant to Fifth

Circuit precedent, contractual privity “is not an absolute requirement to a warranty

of workmanlike performance claim” and that Beverly should be permitted to maintain

this claim as a third-party beneficiary to the contract between Boland and FMT.63

Originating from Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350

U.S. 124 (1956) (“Ryan”), the implied warranty of workmanlike performance allows a

shipowner to claim indemnity from a contractor employed on a vessel where that

contractor fails its obligation to perform its work in a reasonably safe manner. See

Ryan, 350 U.S. at 131–32. In Ryan, the Court announced this doctrine but limited its

holding to stevedoring contracts, suggesting that stevedoring contracts necessarily

61 R. Doc. No. 56-1, at 21.

62 R. Doc. No. 57-1, at 10–11. FMT does not fully brief many arguments, including the

implied warranty of workmanlike performance. See generally id. However, for the

sake of completeness, this Court analyzes FMT’s entitlement to summary judgement

alongside Boland’s throughout this opinion.

63 R. Doc. No. 61, at 15.

included an obligation to stow cargo properly and safely. Id. at 134. In so holding, the

Court allowed the shipowner to claim indemnity against the stevedoring contractor

for damages that it paid to a longshoreman for injuries sustained because of the

contractor’s negligence. Id. at 125.

The Ryan doctrine was “conceived as an admiralty concept to serve special

problems in maritime law arising from the absolute and nondelegable duty of

seaworthiness imposed by the general maritime law upon all vessel owners.”

Whisenant v. Brewster-Bartle Offshore Co., 446 F.2d 394, 399 (5th Cir. 1971). Privity

is not required for this warranty to apply because the stevedore’s implied warranty

“is plainly for the benefit of the vessel whether the vessel's owners are parties to the

contract or not.” Crumady v. The Joachim Hendrik Fisser, 358 U.S. 423, 428 (1959).

“The ship and the shipowner are deemed to be third-party beneficiaries of any

stevedoring contract. . . .” Loffland Bros. Co. v. Roberts, 386 F.2d 540, 549 (5th Cir.

1967).

The Fifth Circuit has noted that it is “extremely hesitant to extend the

burdensome Ryan doctrine to situations not substantially similar to those which gave

birth to the doctrine.” Id. However, the Fifth Circuit has extended the doctrine to

apply to contracts other than stevedoring contracts. See Whisenant, 446 F.2d at 396,

400–01 (applying the Ryan doctrine to a claim against a contractor performing drill

pipe testing services aboard a drill barge when the contractor’s negligence caused the

death of one of its employees, despite no privity between vessel owner and the

contractor). The Fifth Circuit has also applied the doctrine to claims for damages to

property. See Todd Shipyards Corp. v. Turbine Serv., Inc., 674 F.2d 401, 405, 416–17

(5th Cir. 1982) (holding that the Ryan doctrine applied to an action by a general

contractor against a sub-subcontractor that completed negligent repairs to the vessel

where no privity existed between the parties and the only damage claimed was

damage to property).

The Fifth Circuit later questioned the Todd Shipyard holding in Nathaniel

Shipping, Inc. v. General Electric Co., 932 F.2d 366 (5th Cir. 1991) (“Nathaniel

Shipping II”), noting that the extension was “dubious at best” because the warranty

of workmanlike performance’s “origins are in contract rather than tort.” Nathaniel

Shipping II, 932 F.2d at 367. The court noted that the U.S. Supreme Court had only

extended the implied warranty or workmanlike performance to parties lacking

privity when it “concluded that the owner was essentially a third-party beneficiary of

an agreement between the contractor and a third party.” Id.

However, the court declined to revisit the issue of whether the Ryan doctrine

could be applied to parties who lacked privity or status as a third-party beneficiary

because the economic loss doctrine announced in East River foreclosed “any extra-

contractual liability” for economic losses. Id. at 368. The court explained that “a

contractor is not liable in tort for the negligence of its carefully chosen sub-contractor”

but that contractors may be liable under contract where the subcontractor’s

negligence causes a breach of contract. Id. In those cases, the contractor can seek

compensation from its subcontractor “subject to the limitations of the contract.” Id.

Nathaniel II therefore stands for the proposition that the Ryan doctrine requires a

finding of negligence from which a party can be indemnified. Without a valid claim

under tort, claims for indemnification under Ryan cannot stand.

Here, the Court has found that the economic loss rule applies and that all tort

claims are foreclosed in this case. The claims pursuant to the implied warranty of

workmanlike performance are therefore also foreclosed.

ii. Indemnity for Breach of Contract

Boland also claims that the red-letter clause of the contract between FMT and

Boland forecloses any claims of contractual indemnity because there is no express

indemnity provision.64 FMT does not argue that there is an implied right of indemnity

in the contract.65 Rather, FMT argues that indemnity is an equitable doctrine that

entitles a party to compensation for damages awards caused by the fault of another

party.66

In Ryan, the Supreme Court recognized that a contractual right to indemnity

may be express or implied, and it created the Ryan doctrine as an implied contractual

right based on the parties’ special relationship. Ryan, 350 U.S. at 132–33. The Fifth

Circuit has described the Ryan doctrine as expressing an “equitable goal” and having

an “equitable spirit.” See Coffman v. Hawkins & Hawkins Drilling Co., Inc., 594 F.2d

152, 155 (5th Cir. 1979); Whisenant, 446 F.2d at 396, 400.

Reviewing the history of equitable or implied indemnity reveals that the

doctrine originated as “a judicial response to, the rule against contribution among

64 R. Doc. No. 56-1, at 24.

65 See generally R. Doc. No. 60.

66 Id. at 2.

joint tortfeasors” and allows one held responsible for a tort to recover from a party

who caused the harm. Equitable Indemnity: Introduction, 3 Bruner & O'Connor on

Construction Law § 10:146. Common law indemnity most often arises out of special

legal relationships. Id. “The contractor-subcontractor relationship, in most instances,

does not create a ‘special relationship’ permitting a claim of common law indemnity.”

Id. And in maritime law, “complete liability cannot be shifted merely because one

entity is in a better position to avoid a contractual breach” absent this special

relationship. Sea King Corp. v. Eimskip Logistics, Inc., 367 F. Supp. 3d 529, 548–49

(E.D. Va. 2019) (denying a claim of implied contractual indemnity absent a special

Ryan doctrine relationship).

Based on a review of the Fifth Circuit’s descriptions of the Ryan doctrine and

the origins of equitable indemnity, this Court concludes that the analysis required

for equitable indemnity follows the analysis of the Ryan doctrine in maritime law.

Therefore, FMT’s claim for indemnification follows the same analysis as the implied

warranty of workmanlike performance, which is only applied to tort claims. Without

a claim under a contractual right of indemnity, this claim will be dismissed.

c. Implied Duty of Good Faith and Fair Dealing

Boland next argues that it is entitled to summary judgement with respect to

Beverly’s claims against it for breach of the implied duty of good faith and fair dealing

because Boland and Beverly lack contractual privity.67 Beverly claims status as a

67 R. Doc. No. 56-1, at 23.

third-party beneficiary to the contract between FMT and Boland and argues that

third-party beneficiaries are owed a duty of good faith and fair dealing.68

“[I]n the context of admiralty law[,] . . . each contract carries with it a duty of

each party to act in good faith and to deal fairly in performing and enforcing the

contract.” Flores v. Am. Seafoods Co., 335 F.3d 904 (9th Cir. 2003). “[T]he obligation

of good faith and fair dealing is not breached merely by the failure to perform a

particular obligation. A mere failure to fulfill an obligation, without a showing of

intent or ill will, does not constitute a breach of good faith.” Comar Marine Corp. v.

Raider Marine Logistics, L.L.C., No. 6:09-CV-1438, 2013 WL 2181036, at *14 (W.D.

La. May 20, 2013), aff'd, 792 F.3d 564 (5th Cir. 2015) (quoting Dufrene v. Browning–

Ferris, Inc., 1997 WL 587765, at *2 (E.D. La., 1997) (Vance, J.).

“[M]aritime law is silent as to whether a breach of the implied covenant of good

faith and fair dealing claim can exist independently of a breach of contract claim.”

Logan Generating Co., L.P. v. Dann Marine Towing, LC, 669 F. Supp. 3d 321, 337–

38 (D.N.J. 2023). In the absence of an established maritime rule, “the Supreme Court

has approved the application of state law where it serves to supplement, but not

contravene, the general maritime law by filling a ‘gap’ therein.” Parekh, 2017 U.S.

Dist. LEXIS 127800, at *6. And pursuant to Louisiana law, “[a] claim for breach of

this implied covenant of good faith and fair dealing is necessarily based on the

existence of an underlying contract.” Dufrene,1997 U.S. Dist. LEXIS 14691, at *6.

However, third-party beneficiaries to a contract are also owed a duty of good faith

68 R. Doc. No. 61, at 16–17.

and fair dealing under maritime law. Freepoint Commodities LLC v. Ridgebury Kilo

LLC, 632 F. Supp. 3d 549, 559–60 (S.D.N.Y. 2022).

Beverly suggests that FMT and Boland knew that the epoxy repair to the

Metso pump impeller was only intended to be temporary until parties could order a

new impeller.69 But Beverly maintains that neither party communicated that to

Beverly and that at no point did anyone suggest to Beverly that the epoxy repair was

intended to be anything other than a full repair of the impeller.70 And Beverly in

support points to invoices from Boland to FMT with recommendations that read

“repair/replace 46[inch] impeller,”71 supporting an inference that repairing and

replacing the impeller may have been communicated as comparable alternatives.

Beverly points to evidence in Walter Haley’s deposition suggesting that FMT enforced

a forty-five-day timeline with Boland’s repairs, supporting an inference that FMT

might have rushed the repair process.72

Taking the facts in the light most favorable to Beverly, rushing repairs and

failing to fully inform Beverly of the repair’s temporary nature “could constitute a

bad faith breach of the implied covenant of good faith and fair dealing.” See Johnson

v. Daimler Chrysler Corp., No. CIV A 206CV36KS-MTP, 2006 WL 3511438, at *3

(S.D. Miss. Dec. 5, 2006) (stating at the summary judgment stage that failure to warn

a buyer of a car’s defect at the time of purchase could be considered a breach of the

69 Id. at 3.

70 Id. at 4.

71 Id. at 3.

72 See R. Doc. No. 61-4, at 13–14.

implied covenant of good faith and fair dealing). Summary judgement with respect to

Beverly’s claim for breach of the duty of good faith and fair dealing against FMT is

therefore not warranted.

However, Beverly’s claim of bad faith against Boland will be dismissed because

Beverly is not a third-party beneficiary to the contract between FMT and Boland. The

Fifth Circuit in Nathaniel Shipping II suggested that it did not think that the owner

of a vessel was a third-party beneficiary of a contract between a general contractor

and a subcontractor. See Nathaniel Shipping II, 932 F.2d at 367 n.2. In saying so, the

Fifth Circuit cited an illustration in the Restatement (Second) of Contracts. Id. This

illustration reads, “A contracts to erect a building for C. B then contracts with A to

supply lumber needed for the building. C is an incidental beneficiary of B's promise.

. . .” See Restatement (Second) of Contracts § 302(e) illustration 19 (1981).

The Restatement clarifies that property owners are ordinarily not third-party

beneficiaries to contracts between general contractors and subcontractors. See id.

(“Performance of a contract will often benefit a third person. But unless the third

person is an intended beneficiary as here defined, no duty to him is created.”). Beverly

likewise cites to no cases where a court has declared the owner of a vessel to be third-

party beneficiary to a similar contract between a general contractor for repairs and

its subcontractor. “A project owner will doubtless receive incidental benefits from its

contractor's subcontracts; but those benefits alone will not render the owner a third-

party beneficiary.” M.T. Bores, LLC v. Mountain Valley Pipeline, LLC, 552 F. Supp.

3d 580, 588 (S.D.W. Va. 2021). Accordingly, Beverly’s claims against Boland for

breach of the implied duty of good faith and fair dealing will be dismissed.

d. Breach of Contract

Boland next asserts that it is entitled to summary judgment with respect to

claims against it for breach of contract.73 Boland claims this is warranted because it

lacks contractual privity with Beverly and because FMT submits no evidence

supporting that Boland improperly repaired the Metso pump.74 FMT submits that it

is entitled to summary judgment for any claims by Beverly relating to incidents after

July 16, 2022 because FMT was not involved in any of those repairs.75

Beverly’s response asserts that Beverly’s claims can be sustained because

Beverly is a third-party beneficiary to the contract between FMT and Boland.76 FMT’s

motion advances no argument as to why the Court should not dismiss its claims

against Boland for breach of contract.77 And FMT claims that no contract existed

between Boland and FMT after July 2022.78

Here, neither Beverly nor Boland asserts that there is contractual privity

between them.79 And, under the analysis above, Beverly is not a third-party

beneficiary to any contracts between FMT and Boland. Beverly’s claims against

Boland for breach of contract will therefore be dismissed.

73 R. Doc. No. 56-1, 21–23.

74 Id.

75 R. Doc. No. 57, at 1.

76 R. Doc. No. 61, at 15–16.

77 See generally R. Doc. No. 60.

78 R. Doc. No. 57, at 1.

79 See R. Doc. No. 61, at 15; R. Doc. No. 56-1, at 1.

Boland points to an absence in the record of any evidence suggesting that

Boland failed to perform the duties of the contract between it and FMT.80 FMT points

to no evidence suggesting breach of contract81 and claims that no contract existed

between FMT and Boland after July 16, 2022.82 Without any such evidence, there is

no genuine dispute of material fact, and FMT’s claims for breach of contract against

Boland will be dismissed.

However, Beverly’s claims against FMT will not be dismissed because there is

a genuine factual dispute about whether FMT and Beverly’s contractual relationship

continued after July 16, 2022 and whether it failed to deliver on its obligations under

the contract. Beverly points to testimony from David Cascio’s deposition suggesting

that Beverly and FMT remained in communication about repairs after July 16, 202283

and stating that FMT paid Boland’s invoices for work after that date.84 This evidence

supports an inference that FMT and Beverly may have had a continuing contractual

relationship after July 16, 2022.

Beverly also points to evidence that, when viewed in the light most favorable

to Beverly, supports an inference that FMT may have failed to deliver on its

obligations under the contract. Beverly points to various mechanical problems that

the BELLA ROSE continued to have after FMT returned the vessel85 as well as

80 R. Doc. No. 56-1, at 23.

81 R. Doc. No. 57-1.

82 R. Doc. No. 57, at 1.

83 See R. Doc. No. 56-12, at 10 (discussing communications between FMT and Beverly

in September and October 2022).

84 R. Doc. No. 56-12, at 11–12.

85 R. Doc. No. 61, at 4–5.

testimony from Boland representative Walter Haley’s deposition suggesting that

FMT may have rushed repairs.86 Boland also points to invoices from Boland showing

it found deficiencies after FMT returned the BELLA ROSE to Beverly, suggesting

FMT may have done certain repairs improperly.87 In light of this evidence, there is a

genuine dispute of material fact regarding whether FMT breached its contract with

Beverly.

IV. CONCLUSION

Accordingly, and for the foregoing reasons,

IT IS ORDERED that Boland’s motion for summary judgment is GRANTED.

Beverly’s and FMT’s claims of negligence against Boland are DISMISSED WITH

PREJUDICE. Beverly’s claims of breach of contract, breach of the implied warranty

of workmanlike performance, and breach of the implied duty of good faith and fair

dealing against Boland are DISMISSED WITH PREJUDICE. FMT’s claims

against Boland for contribution, indemnity, and breach of contract are DISMISSED

WITH PREJUDICE.

IT IS FURTHER ORDERED that FMT’s motion for summary judgement is

GRANTED IN PART AND DENIED IN PART. The motion is granted with respect

to Beverly’s claims of negligence against FMT and Beverly’s claim for breach of the

86 See R. Doc. No. 61-4, at 13–14 (testifying that FMT had a 45-day requirement to

finish work with Boland).

87 See R. Doc. No. 61-7 (outlining Boland’s findings in October 2022 and stating that

there were alignment issues as well as damage to seals and bolts). It is undisputed

that FMT installed the Metso pump aboard the BELLA ROSE. R. Doc. No. 56-2, at ¶

53.

implied warranty of workmanlike performance. Those claims are DISMISSED

WITH PREJUDICE. The motion is DENIED with respect to Beverly’s claims for

breach of contract and breach of the implied duty of good faith and fair dealing.

New Orleans, Louisiana, July 3, 2024.

LANEE M. AFRICK

UNITED STATES DISTRICT JUDGE

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