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Indelpro S.A. de C.V. v. Valero Marketing and Supply Co.

United States District Court, S.D. Texas, Houston Division

December 18, 2019

INDELPRO S.A. DE C.V., Plaintiff,
v.
VALERO MARKETING AND SUPPLY COMPANY, Defendant.

          MEMORANDUM AND OPINION

          Lee H. Rosenthal, Chief United States District Judge

         Indelpro S.A. de C.V. has sued Valero Marketing and Supply Company, alleging that Valero supplied contaminated marine fuel to one of its ships, the M/V Zoe Schulte, damaging her engine and engine components. (Docket Entry No. 1). Indelpro asserts state-law claims of contract breach, breach of warranties, negligence, and product liability. (Id.). Valero answered and filed a third-party complaint against Trafigura Trading LLC. (Docket Entry No. 5). Valero alleged that Trafigura sold the contaminated fuel that damaged the M/V Zoe Schulte to Valero, and asserted state-law contract breach, negligence, breach of warranties, products liability, and a violation of the Texas Civil Practice and Remedies Code. (Id.). Trafigura has moved for either a more definite statement of Valero's third-party complaint, or to sever some of Valero's third-party claims and to transfer those claims to the Southern District of New York under forum-selection clauses, and to dismiss the remaining third-party claim under an arbitration clause. (Docket Entry Nos. 24-26).

         Before the court ruled on those motions, Valero moved for leave to amend its third-party complaint, to add factual allegations and to assert a Rule 14(c) tender as to Trafigura. (Docket Entry No. 39). Trafigura opposes this motion because of the attempted Rule 14(c) tender. (Docket Entry No. 43).

         Based on the pleadings, motions, record, and the applicable law, the court grants in part and denies in part Valero's motion for leave to file an amended third-party complaint. The court denies the motion for leave to amend to add the Rule 14(c) tender because this amendment would be futile. The court otherwise grants Valero's motion for leave to amend. The remaining motions will be addressed in a separate order to be issued with the related motions pending before this court in The National Shipping Company v. Valero, 19-1096 (S.D. Tex. 2019).

         The reasons for the ruling in this Memorandum and Opinion are explained in detail below.

         I. Background

         Indelpro, a Mexican company, time-chartered the M/V Zoe Schulte. (Docket Entry No. 1 at ¶¶ 4, 8). In March 2018, Indelpro ordered over 600 metric tons of marine fuel from Valero. (Id. at ¶ 14). Indelpro received an order confirmation stating that the fuel would meet industry “specification standards.” (Id. at ¶ 16). Valero delivered the fuel that month, but Indelpro did not use it immediately. (Id. at ¶¶ 18, 20).

         In May 2018, Indelpro was using the fuel in the M/V Zoe Schulte when the vessel “began experiencing serious operational issues.” (Id. at ¶ 21). Indelpro tested the fuel and discovered that it did not meet industry standards or the “basic international standard for marine fuel.” (Id. at ¶¶ 23-25). Indelpro alleges that as a result of using the contaminated fuel, the M/V Schulte was physically damaged and Indelpro's operations were disrupted and delayed. (Id. at ¶¶ 27-30).

         In March 2019, Indelpro sued Valero in federal district court on the basis of diversity jurisdiction under 28 U.S.C. § 1332, and, “as an independent basis for jurisdiction over the subject matter of this action, ” admiralty and maritime jurisdiction under 28 U.S.C. § 1333. (Id. at ¶¶ 2- 3). Valero answered and filed a third-party complaint against Trafigura Trading LLC under Federal Rule of Civil Procedure 14(a). (Docket Entry No. 5). Valero alleged that Trafigura supplied five fuel shipments under five contracts between February and March 2018, and that it was Trafigura's fuel that damaged the M/V Zoe Schulte. (Id. at ¶¶ 10-29). Trafigura moved for either a more definite statement, or to sever some of the claims against it and to transfer them to the Southern District of New York under forum-selection clauses, and to dismiss the remaining claim under an arbitration clause. (Docket Entry Nos. 24-26). Trafigura argued as to the more definite statement that “Valero alleges that Trafigura delivered [fuel] pursuant to five contracts, ” but “has not identified the contracts, and Trafigura has located only three relevant contracts.” (Docket Entry No. 26 at 2).

         Before the court ruled on those motions, Valero moved for leave to amend its third-party complaint, including to assert a Rule 14(c) tender against Trafigura. (Docket Entry No. 39). Trafigura opposes this motion. (Docket Entry No. 43).

         II. The Legal Standard for Leave to Amend

         A party may amend its pleading once without seeking the court's leave or the adverse party's consent before a responsive pleading is served. Fed.R.Civ.P. 15(a). After a responsive pleading is served, the party may amend only “with the opposing party's written consent or the court's leave.” Id. Although a court “should freely give leave when justice so requires, ” id., leave to amend “is not automatic, ” Matagorda Ventures, Inc. v. Travelers Lloyds Ins. Co., 203 F.Supp.2d 704, 718 (S.D. Tex. 2000) (citing Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 598 (5th Cir. 1981)). A district court reviewing a Rule 15(a) motion to amend pleadings may consider factors such as “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of the allowance of the amendment, [and] futility of the amendment.” Rosenzweig v. Azurix Corp., 332 F.3d 854, 864 (5th Cir. 2003) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). A plaintiff should be denied leave to amend a complaint if “the proposed change clearly is frivolous or advances a claim or defense that is legally insufficient on its face.” 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1216 (3d ed. 2019); see also Ayers v. Johnson, 247 Fed.Appx. 534, 535 (5th Cir. 2007) (“A district court acts within its discretion when dismissing a motion to amend that is frivolous or futile.”).

         III. Analysis

         After Trafigura's motions were fully briefed, but before the court ruled on them, Valero moved for leave to file an amended third-party complaint against Trafigura. (Docket Entry No. 39). The proposed amended complaint cures the deficiencies Trafigura identified in its motion for a more definite statement. The amended third-party complaint alleges that there were three contracts and identifies them, as well as the shipments that contained the allegedly contaminated fuel. (Docket Entry No. 39-1 at ¶¶ ...


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