Hess Oil Virgin Islands Corp. v. Ingersoll-Rand Co.

20 V.I. 350, 1983 U.S. Dist. LEXIS 10252
Procedural entryThis page is a short order in Hess Oil Virgin Islands Corp. v. Ingersoll-Rand Co.. Read the opinion of the Court — 19 V.I. 17
District Court, Virgin Islands·Decided October 27, 1983·No. Civil No. 1979/178·Published

Opinion

CHRISTIAN, Chief Judge

MEMORANDUM AND ORDER

Before the Court is the motion of defendant Universal Oil Products, Inc. (hereinafter U.O.P.) for summary judgment on Count VI of the amended complaint. Fed. R. Civ. P. 56.

In this action for damages sustained by plaintiff Hess Oil Virgin Islands Corporation (hereinafter Hess) as a result of an explosion and fire at its St. Croix refinery, Hess alleges that it was provided with a defective product by U.O.P. and that the explosion and fire were caused by the said defective product. Count VI of its amended complaint asserts a strict products liability cause of action against U.O.P. In its motion for summary judgment, U.O.P. argues 1) that it provided a professional service to Hess and not a “product” within the contemplation of section 402A of the Restatement (Second) of Torts and 2) that this Court should adopt the rationale of an order of the United States District Court for the Northern District of Oklahoma in which that Court decided, in a case U.O.P. claims involved the same parties and issues, that Hess was precluded from asserting [352]*352a strict liability cause of action against U.O.P. Hess, of course, opposes the motion in all respects.

U.O.P. holds the patent to several refining processes which it licenses to the petrochemical industry. Hess and U.O.P. entered into a series of contracts under which U.O.P. provided Hess with the designs and specifications for the U.O.P. Hydrobon process, a method of desulfurizing oil. This Hydrobon process contemplated the construction of a unit known as the Distillate Unifining Unit no. 2 (hereinafter D.U.2). Hess had the D.U.2 constructed by sub-contract with the Litwin Corporation, under the supervision of engineers from U.O.P.

Two of the many contracts between Hess and U.O.P. concerning the Hydrobon process are at issue here: 1) An “engineering agreement,” dated October 15, 1967, and 2) a-“guarantee agreement” of the same date. Paragraph 7 of the engineering agreement provides, in pertinent part:

(a) ... UOP’s total liability for breach of the foregoing warranty, if any, or otherwise for any losses, damages, claims or demands arising out of the work and services performed by it under this agreement, shall be limited in total of one-half of the payments made to UOP by REFINER under paragraph 1 of Schedule D attached hereto for work and services performed by UOP under Article 1 hereof in respect of the Unit for which such work and services shall have been performed and provided that any such claim or demand shall be made in writing to UOP prior to the termination of this agreement with respect to such Unit.
(e) UOP shall not be responsible or liable for (i) defective material and equipment, or (ii) property damage or bodily injury arising out of the work and services performed under this agreement unless caused by the willful acts or negligence of UOP. Except as otherwise provided in this Article 7, UOP shall not be liable for or obligated in any manner to pay any losses, damages, claims or demands arising out of the work and services performed by it under this agreement. In no event shall UOP be liable for or obligated in any manner to pay any consequential or indirect damages.

Paragraph 7 of the guarantee agreement states in part:

(e) . . . UOP shall not be responsible or liable for defective material and equipment or for the workmanship, willful acts or [353]*353negligence of any contractor or person other than UOP in connection with the construction, erection, alteration, maintenance, repair and operation of the Unit.
(f) Except to the extent herein expressly provided, UOP shall not be liable for or obligated in any manner to pay any losses, damages, claims or demands, arising out of the work and services performed by it hereunder or resulting from its failure to meet the guarantees herein made. In no event shall UOP be liable for or obligated to pay in any manner any consequential or indirect damages.

In a case docketed at No. 75-C-383-C in the United States District Court for the Northern District of Oklahoma, Chief Judge H. Dale Cook held, in an Order dated November 9, 1979, that provisions in two contracts between Hess and U.O.P. (concerning another licensing agreement between the parties) precluded Hess from asserting a strict products liability cause of action in a suit by Hess against U.O.P. That case, Hess Oil Virgin Islands Corp. v. Universal Oil Products, was an action by Hess Oil against U.O.P. over the alleged failure of another unit designed by U.O.P. for Hess. The relevant liability provisions of the contracts therein involved were identical to the provisions involved in the instant case. After examining the law on the subject and the particular language of those provisions, Chief Judge Cook stated, at page 14 of his November 9,1979, order:

These agreements clearly indicate the intention of the parties that UOP would be liable for its work and services only in the event of the willful acts or negligence of UOP employees. This precludes Hess’ assertion of a strict liability cause of action in the instant case ....

U.O.P. now urges that we follow the order of the Oklahoma District Court and, alternatively, argues that what U.O.P. provided to Hess was not a product within the meaning of section 402A. Hess argues that the Oklahoma District Court erroneously construed the contract before it and that U.O.P. did indeed provide a product to Hess for which U.O.P. is answerable in an action under section 402A. What this Court must determine, therefore, is firstly, whether the decision of the District Court for the Northern District of Oklahoma is or should be controlling in the instant case, and secondly, if not, whether U.O.P. provided a product within the meaning of section 402A of the Restatement (Second) of Torts.

Before collateral effect may be given to a prior action, four requirements must be met, namely: 1) the issue sought to be pre[354]*354eluded must be the same as that involved in the prior action; 2) that issue must have been actually litigated; 3) it must have been determined by a valid and final judgment; and 4) the determination must have been essential to the prior judgment. Haize v. Hanover Insurance Co., 536 F.2d 576, 13 V.I. 327 (3d Cir. 1976), citing 1B Moore’s Federal Practice ¶0.433 (1974). All of these requirements are satisfied in this case with the possible exception of the third requirement: that of a final judgment. The parties have indicated in their memoranda that there are post trial motions pending in the Oklahoma case and that the time for appeal has yet to run. Hess argues that it is “axiomatic” that a judgment is not final when there are post-trial motions outstanding, and that therefore the Oklahoma decision cannot have collateral estoppel effect on this action. However, a closer analysis of the meaning of “final judgment” for purposes of collateral estoppel shows us that the proposition advanced by plaintiff is far from “axiomatic.” Section 13 of the Restatement (Second) of Judgments states:

§ 13. Requirement of Finality

The rules of res judicata are applicable only when a final judgment is rendered.

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Hess Oil Virgin Islands Corp. v. Ingersoll-Rand Co., 20 V.I. 350, 1983 U.S. Dist. LEXIS 10252 (vid 1983).

20 V.I. 350 (Hess Oil Virgin Islands Corp. v. Ingersoll-Rand Co.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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