Trial Judge Denies Economic Damage Claim in Seacor Limitation Action Proprietary Interest Rule Bars Recovery

In the Matter of Falcon Global Offshore II, 2023 U.S. Dist. LEXIS 193891 *, 2023 WL 7128849 (E.D. La. Oct. 30, 2023, Milazzo, J.)

            When L/B SEACOR POWER capsized off the coast of Louisiana on April 13, 2021, resulting in the deaths of 6 crew members, presumed death of 7 others who were missing and rescue of another 7, the liftboat also landed on a pipeline for which Cox Operating LLC ("Cox Operating"), Energy XXI Gulf Coast Inc. ("Energy XXI Gulf Coast"), and Energy XXI Pipeline LLC (Energy XXI Pipeline")[1] (collectively Cox) brought claims for damage to the pipeline as well as economic damage claims. Seacor Marine (Limitation Petitioners Falcon Global Offshore II LLC, Seacor Liftboats LLC, and Seacor Marine LLC (collectively "Seacor")[2] brought a Motion for Summary Judgment to dismiss the claims for economic losses as barred by the eponymous Robins Dry Dock Rule.

            Judge Milazzo explained the relationships of the Cox claimants and then proceeded to address the claim of Cox Operating. While Cox Operating owned the pipeline, it did not own the oil being transported through the pipeline; accordingly, Robins Dry Dock precludes recovery. The operating agreement with EPL, which owns the oil, does not give Cox Operating any right of recovery to the proceeds of the sale of oil.[3] Energy XXI Gulf Coast owns the pipeline but not the oil and has a claim for the physical damage to the line.[4]

            Cox asserted that the “integrated unit” exception[5] to the proprietary interest rule applied. Seacor countered arguing that Texas E. Transmission Corp.[6] nonetheless bars recovery. Judge Milazzo held that neither case was on point but determined that Cox asked the court to ignore corporate separateness to recover economic damages and yet recognize it for tax and liability purposes lacks legal foundation and defies logic.[7] The Robins Dry Dock Rule is a bright line rule and bars recovery.

            We would like to thank Craig Brewer of Staines, Eppling & Kenney for bringing this to our attention.

[1] 2023 U.S. Dist. LEXIS 193891 at *14.

[2] Id.

[3] Id. at *20-21.

[4] Id. at *17.

[5] Citing Domar Ocean Transportation, Ltd. v. M/V Andrew Martin. 754 F.2d 616 (5th Cir. 1985).

[6] 877 F.2d 1214 (5th Cir. 1989).

[7] 2023 U.S. Dist. LEXIS 193891 at *24.