VL8 Pool, Inc. v. Glencore Ltd., 1:20-cv-02053

Background

VL8 Pool, Inc. (time charterer of a vessel) purchased marine fuel from Glencore Ltd. on or about March 11, 2018; Glencore had procured the fuel from Valero and stored it at the BOSTCO tank farm in La Porte, Texas.
VL8 alleges Valero-supplied fuel at BOSTCO was contaminated and dangerous; two separate vessels reported damage in February 2018, but initial testing of VL8’s specific parcel showed the fuel was “on-spec.”
VL8 contends Glencore knew or should have known of contamination by February 2018, yet continued selling fuel worldwide without warning or remediation.
Procedural posture: the court previously granted Glencore’s motion to dismiss and gave VL8 leave to amend; VL8 amended but dropped negligence and product-liability counts and repled breach of contract/warranty and indemnity/contribution.
Glencore moved to dismiss the amended complaint. The court held the contractual limitation-of-liability (Section 7(a) of the GT&Cs) enforceable and dismissed Count I, and dismissed Count II as premature/inapplicable; the case was closed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Enforceability of contractual exculpatory clause (Section 7(a))	Glencore had actual or constructive knowledge of contamination by Feb 2018 and acted with gross negligence (or worse) by continuing sales and failing to warn, so the clause should be unenforceable	The limitation of liability is a negotiated clause between sophisticated parties and VL8’s allegations do not plausibly show fraud, malicious intent, or gross negligence to invalidate it	Clause enforceable; Count I dismissed—allegations insufficient to show intentional wrongdoing or gross negligence; damages pleaded were consequential and barred by the clause
Indemnity and contribution claim	VL8 seeks indemnity/contribution from Glencore because vessel owner Delos has asserted claims against VL8 under the Time Charter	Indemnity is not justiciable until VL8 is held liable; common-law indemnity requires VL8 be free from negligence; contribution requires a showing of some negligence by Glencore, which VL8 did not plead	Count II dismissed: indemnity claim premature/not justiciable; common-law indemnity not available because VL8 has not been adjudicated liable and has not shown it is free from negligence; contribution fails because negligence claims against Glencore were not pled

Key Cases Cited

Kalisch-Jarcho, Inc. v. New York, 448 N.E.2d 413 (N.Y. 1983) (exculpatory clauses unenforceable for misconduct that "smacks of intentional wrongdoing" including fraud, malice, or gross negligence)
Electron Trading, LLC v. Morgan Stanley & Co. LLC, 157 A.D.3d 579 (App. Div. 2018) (courts routinely enforce negotiated limitation-of-liability provisions between sophisticated parties)
Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (plausibility standard for pleading under Rule 12(b)(6))
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading must state a plausible claim, not mere possibility)
Franceskin v. Credit Suisse, 214 F.3d 253 (2d Cir. 2000) (diversity jurisdiction defeated where alien parties exist on both sides)
Port Dock & Stone Corp. v. Oldcastle Northeast, Inc., 507 F.3d 117 (2d Cir. 2007) (complaint must give fair notice of claims and grounds)
Peter F. Gaito Architecture, LLC v. Simone Dev. Corp., 602 F.3d 57 (2d Cir. 2010) (court may consider documents attached to or incorporated into the complaint on a motion to dismiss)
Goldman v. Belden, 754 F.2d 1059 (2d Cir. 1985) (district court on Rule 12(b)(6) should decide legal sufficiency of complaint without weighing extrinsic evidence)
Sutton Park Dev. Corp. Trading Co. Inc. v. Guerin & Guerin Agency Inc., 297 A.D.2d 430 (App. Div. 2002) (gross negligence differs in kind and degree from ordinary negligence)
U.S. Underwriters Ins. Co. v. Orion Plumbing & Heating Corp., 321 F. Supp. 3d 313 (E.D.N.Y. 2018) (indemnification claims generally not justiciable until liability has been imposed)