Junior Money Bags, Ltd. v. Segal , 970 F.2d 1 ( 1992 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________
No. 90-3862
__________________
JUNIOR MONEY BAGS, LTD.,
A Louisiana Corporation,
Plaintiff-Appellant
Cross-Appellee,
versus
MOEY SEGAL,
Defendant-Appellee
Cross-Appellant-Third Party
Plaintiff-Appellant,
versus
BLAINE S. KERN,
Third-Party Defendant-Appellee.
* * * * * * * *
NEW ORLEANS CITY OF,
Plaintiff,
versus
MOEY SEGAL,
Defendant-Third Party
Plaintiff-Appellant,
versus
BLAINE S. KERN,
Third-Party Defendant-Appellee.
______________________________________________
Appeals from the United States District Court for the
Eastern District of Louisiana
______________________________________________
(August 17, 1992)
Before THORNBERRY and GARWOOD, Circuit Judges*.
GARWOOD, Circuit Judge:
Plaintiff-appellant Junior Money Bags, Ltd. (Money Bags)
appeals the district court's dismissal of its claim for declaratory
relief. Defendant-cross-appellant Moey Segal (Segal) appeals the
district court's dismissal of its counterclaim against Money Bags
and third party claim against Blaine Kern (Kern). Finding no
reversible error, we affirm.
Facts and Proceedings Below
To facilitate its construction and operation of a gondola
system over the Mississippi River at New Orleans, the Mississippi
Aerial River TransitSQPerez, Inc. (MART) entered into a lease with
Money Bags. Money Bags is a Louisiana corporation wholly owned by
Kern. In the lease, MART leased land and airspace to construct the
westbank tower support and landing station for the gondola.
Section 9 of the lease provided in part:
"Lessee may construct towers for the [gondola] System .
. . at Lessee's expense, which towers shall at the
termination of this lease become the property of Lessor,
subject to the rights of Banque de L'Union Europeenne
("BUE"), or BUE's assignee or transferee. Lessee,
however, expressly waives all right to compensation
*
Judge Davis, a member of the panel hearing oral argument,
subsequently recused himself. The decision of the panel is
accordingly rendered by a quorum. 28 U.S.C. § 46(d).
2
therefor. The Lessor, at its option, may, however,
require the leased premises to be replaced in their
original condition resulting in Lessee having to remove
the towers and all underlying foundations."
The lease further provided that it shall terminate "on the earlier
of April 30, 2083 or three (3) months after cessation of using the
leased premises as an integral part in the operation of an aerial
river crossing system."
MART obtained financing for the gondola through Banque de
L'Union Europeenne (BUE). As security, MART executed three
instruments: a collateral mortgage, a collateral chattel mortgage,
and an Assignment of Contracts and Permits. In the collateral
chattel mortgage, MART mortgaged its physical properties, including
the westbank tower that was to be built on Money Bags' property,
and certain contracts, including the Money Bags' lease.
The gondola system was completed in 1984 and operated in
conjunction with the World's Fair in New Orleans that year.
However, shortly after the World's Fair concluded, the gondola
ceased operation.
At approximately the same time, MART defaulted on its loan
with BUE. BUE filed suit in the United States District Court for
the Eastern District of Louisiana to recover the unpaid balance of
its loan. On October 31, 1986, a consent judgment was entered in
favor of BUE against MART. By the terms of the judgment, the court
recognized and maintained BUE's security interests, including its
interest in the lease with Money Bags.
On May 4, 1989, Segal purchased the consent judgment from BUE
for one million dollars, and the district court substituted Segal
3
as the judgment creditor entitled to exercise all of the rights
granted by the consent judgment. Thereafter, Segal executed the
judgment and a marshal's sale was held. At the marshal's sale,
Segal was the only bidder and by marshal's deed acquired all of the
property that constituted the gondola system, including the lease
with Money Bags.
On September 16, 1986, Money Bags sued MART in Louisiana state
court seeking judicial termination of the lease in question. The
suit was dismissed without prejudice on October 18, 1989.
After the marshal's sale, Segal attempted to negotiate a
servitude agreement with Money Bags to allow him to operate the
gondola system. In the proposed agreement drafted by Segal's
counsel it is recited that Segal is the owner of the foundations.
Money Bags rejected the servitude and suggested instead an
amendment to the Money Bags/MART lease. New Orleans Mayor Sidney
Bartholemy became involved and attempted to facilitate an agreement
between the parties to keep the gondola in New Orleans.
Negotiations, however, broke down. Segal hired Arthur Tolar to
negotiate with officials in Corpus Christi, Texas, regarding moving
the gondola there. The Texas State Aquarium was being built in
Corpus Christi, and Segal apparently thought that the gondola might
serve as transportation across the channel to the aquarium from the
city proper.
In a letter dated October 12, 1989, Segal's attorney requested
permission from Kern and Money Bags on behalf of his client "to
come on your land to remove the Gondola Tower," purportedly so the
gondola could be moved to Corpus Christi. Kern's attorney
4
responded in a somewhat elliptical letter dated October 13, 1989.
The letter began by acknowledging receipt of the letter of October
12, 1989, which "was evidently being written on behalf of Mr. Moey
Segal but does not so state" and continued by stating that if the
letter were written on behalf of Segal to so advise and provide
Segal's address. The letter went on to say, "In the event that you
have any legal basis (other than the MART lease) or authority
requiring Junior Money Bags, Ltd. to allow Mr. Segal to traverse
its property or to remove the gondola tower located therein, please
furnish us with the basis for your opinion for our review." The
letter closed by stating that Money Bags "does not grant your
unnamed client permission to come on its land to remove the gondola
tower but is willing to reconsider its position based on your
response to this letter."
Segal's lawyer responded on October 17, 1989, explicitly on
behalf of Segal. The letter stated that Money Bags' intentional
refusal to allow Segal to obtain possession of his property was
causing Segal damages of at least $15 million, demanded immediate
payment thereof, and threatened suit if such payment was not
immediately forthcoming.
On October 18, 1989, Money Bags sued Segal, seeking a
declaration that Segal's right of occupancy under the lease had
terminated and that Segal had succeeded to MART's obligation to
remove the gondola tower and underlying foundation from the leased
property. As an alternative to requiring Segal to restore the
leased premises to their original condition according to the terms
of the lease, Money Bags sought relief in the form of money damages
5
in an amount sufficient to cover the costs of removal plus
attorneys' fees and costs. In order to obtain personal
jurisdiction over Segal, Money Bags sought a writ of nonresident
attachment against the property Segal had acquired in the marshal's
sale. When Segal submitted himself to the jurisdiction of the
district court, Money Bags released the attachment.1
Segal counterclaimed against Money Bags and filed third party
demands against Kern and the City of New Orleans. Segal alleged
wrongful conversion, tortious interference with business relations
and opportunities, interference with contract, and abuse of
process.
Segal filed a Motion for Summary Judgment. In a minute entry
dated May 22, 1990, the district court granted Segal summary
judgment in part. The district court held that Segal had no
obligation to remove the foundations and restore the land to its
original condition. The district court noted that the leased
premises had not been used as an integral part of the operation of
an aerial river crossing system for a period of far longer than
three months prior to the filing of the lawsuit. However, because
of the potential for uncertainty regarding when the leased premises
stopped being used as an integral part of the system, the district
court found that the lease had not expired as a matter of course
1
In the district court, one of Segal's counterclaims was
based on abuse of process by wrongful attachment. The district
court ultimately dismissed the counterclaim. While Segal does
not challenge the district court's ruling on the abuse of process
by wrongful attachment claim, we note in passing that there
appears to be nothing improper in this use of the writ of
attachment to obtain jurisdiction over a nonresident defendant
such as Segal.
6
and judicially dissolved the lease effective from the date of its
ruling. The district court then determined that Segal had not
assumed the obligation under the lease of removing the gondola
tower because Segal had never been in a position to acquire any
real rights or benefits under the lease. The district court noted
that even though the lease had not formally terminated, the leased
premises had not been used in the operation of an aerial river
transport system for three years prior to Segal's acquisition.
Money Bags thus had the option of procuring a judicial dissolution
of the lease at any time; there was thus no unexpired term of the
lease for Segal to acquire. The district court refused to require
Segal to discharge the obligations under the lease when he had
never had an opportunity to enjoy the benefits, and accordingly
entered summary judgment in his favor on the issue of restoring the
land.
Money Bags promptly filed a Motion to Reconsider and its own
Motion for Summary Judgment. In a second minute entry dated July
12, 1990, the district court disposed of these motions and
addressed the source of Segal's right to claim ownership of the
gondola tower while at the same time avoiding the obligation of
removing the foundations and restoring the land. The court
stressed that Segal's rights to the tower derived not from the
lease, but from the chattel mortgage that Segal had acquired from
BUE. The court noted that at the termination of the lease, Money
Bags also acquired an ownership interest in the tower under the
lease, and proceeded to determine whose interest had priority. In
deciding that Segal's interest deriving from the chattel mortgage
7
had priority, the district court rejected Money Bags' argument that
MART's interest in the tower was subject to Money Bags' option to
retain ownership of the tower at the expiration of the lease. The
court concluded that MART's interest was unencumbered because Money
Bags' interest did not arise until the tower was built, after MART
had executed the chattel mortgage to BUE, and because the lease
specifically conditioned Money Bags' option to assert ownership on
the rights of BUE. The court explained:
"Therefore, the rights that Segal acquired from [BUE]
pursuant to the collateral chattel mortgage were not
burdened by Money Bags' right to claim ownership of the
tower under the terms of the lease. Accordingly, the
court concludes that, having acquired [BUE]'s rights and
having been substituted as the judgment creditor entitled
to exercise all rights granted by the consent judgment
previously rendered, Segal is entitled to claim ownership
of the westbank tower to the gondola incident to his
rights that flow from the collateral chattel mortgage
between MART and Banque."
The court thus granted in part and denied in part Money Bags'
motions for reconsideration and for summary judgment. The court
declared Segal to be the owner of the westbank gondola tower and to
be entitled to access to Money Bags' land to remove the tower
without obligation to remove the foundations. The court also
granted Money Bags' partial summary judgment and dismissed Segal's
claim for intentional interference with contractual relations on
the grounds that no such tort existed in Louisiana.2
2
Segal does not challenge on appeal the district court's
dismissal of his claim for intentional interference with
contractual relations. We note in passing that such dismissal
appears to be correct. The Louisiana Supreme Court has recently
recognized the tort of interference with contract, but stressed
its restrictive scope:
"It is not our intention, however, to adopt whole and
8
After thus disposing of Money Bags' claims and Segal's
counterclaim for interference with contract, a bench trial was held
on Segal's remaining counterclaims and third party claims, namely
abuse of process, abuse of rights, tortious inference with business
relations, and conversion. On October 24, 1990, the district court
entered its Findings of Fact and Conclusions of Law and dismissed
all of Segal's counterclaims. In its Judgment of October 29, 1990,
the district court dismissed Money Bags' action and Segal's
counterclaims with prejudice. Both Segal and Money Bags appeal.
Discussion
Because Money Bags and Segal each appeal from the district
court's judgment, we will address separately the arguments relating
to Money Bags' complaint and Segal's counterclaims. As a prelude,
we note that both Money Bags' claims and Segal's counterclaims are
governed by Louisiana substantive law, and as the Supreme Court
recently held, we "review de novo a district court's determination
of state law." Salve Regina College v. Russell, 111 S. Ct. 1217,
1221 (1991). Our role when presented with an unsettled point of
undigested the fully expanded common law doctrine of
interference with contract, consisting of `a rather
broad and undefined tort in which no specific conduct
is proscribed . . . .' In the present case we
recognize . . . only a corporate officer's duty to
refrain from intentional and unjustified interference
with the contractual relation between his employer and
a third person." 9 to 5 Fashions v. Spurney, 538 So. 2d
228, 234 (La. 1989).
Federal courts have respected the restricted nature of this new
delict. See American Waste & Pollution Cont. v. Browning-Ferris,
949 F.2d 1384, 1386-90 (5th Cir. 1991); Nowling v. Aero Services
Intern., 752 F. Supp. 1304, 1310 (E.D. La. 1990); Matrix v. Drug
Emporium, 756 F. Supp. 280, 284. The district court properly
dismissed this claim.
9
state law "is to determine how the [Louisiana] Supreme Court would
resolve the issue if presented to it." American Waste & Pollution
Cont. v. Browning-Ferris, 949 F.2d 1384, 1386 (5th Cir. 1991)
(quoting Coatings Mfrs. Inc. v. DPI, Inc., 926 F.2d 474, 479 (5th
Cir. 1991)).
I. Money Bags v. Segal
On appeal, Money Bags argues that the district court erred in
holding that Segal derived the right to remove the gondola towers
without being bound by any obligation to remove the foundations
under the lease. Money Bags contends that Segal's right to the
towers arises solely from the lease, and thus Segal cannot remove
the towers without becoming subject to the obligations of the
lease, through which Money Bags could either require Segal to
remove the foundations as part of restoring the land to its
original condition or choose to retain both the towers and
foundation. Alternatively, Money Bags contends that if the lease
is held not to govern, Segal's and Money Bags' rights are
established by article 493 of the Louisiana Civil Code, and under
article 493 Segal is obligated to remove the foundations.
A. Competing interests in the gondola system
Segal wore two different hats in claiming rights to the
gondola system. After MART defaulted on its loan with BUE, BUE
sued and a consent judgment was entered in favor of BUE against
MART. By the terms of the judgment, the court recognized and
maintained BUE's security interests, including its interest in the
lease with Money Bags and in the collateral chattel mortgage. On
May 4, 1989, Segal purchased BUE's rights under the consent
10
judgment, and the district court substituted Segal as the judgment
creditor. A writ of fieri facias was subsequently entered
directing the marshal to seize and sell the property of MART
mortgaged to BUE. Specifically included was "the property
encumbered by that certain Collateral Mortgage and Collateral
Chattel Mortgage granted by [MART]"3 and "the right, title and
interest of [MART] to the following: . . . (f) Lease from Junior
Money Bags, Ltd. to Borrower dated September 28, 1983."4 Segal was
the successful purchaser at the execution sale. The marshal
subsequently executed a deed to Segal transferring all of MART's
property and rights mortgaged to BUE, including the Money Bags'
lease and "all buildings, improvements, structures, towers and
other betterments located on the aforedescribed properties whether
now existing or hereinafter constructed," and all of MART's
interest in the permits or contracts listed in the Assignment of
Contracts and Permits, including the Money Bags' lease, necessary
to permit the purchaser to exercise the rights to operate the
gondola system. The Deed also directed the Recorder of Mortgages
to cancel the Collateral Chattel Mortgage granted by MART on any
document in which it was listed as an encumbrance. Segal thus not
3
The Lease from Junior Money Bags to MART was one of the
properties mortgaged by MART in the Collateral Chattel Mortgage.
Also included were "all buildings, improvements, structures,
towers and other betterments located on the aforedescribed
properties whether now existing or hereinafter constructed."
4
In addition to the Money Bags' lease, twelve other leases,
ordinances, agreements, and servitudes were listed as rights,
titles and interests of MART specifically included in the seizure
and sale. These thirteen interests were the same interests
listed in the "Assignment of Contracts and Permits" from MART to
BUE.
11
only acquired MART's interest in the lease, but also acquired all
of MART's ownership interest in the gondola system by foreclosing
on the chattel mortgage and purchasing the system at the execution
sale. We do not understand Money Bags to dispute, or have
disputed, this.
Money Bags, however, also had an interest in the gondola
system. The lease between MART and Money Bags provided that MART
could construct towers on Money Bags' land, but at the termination
of the lease, the towers became the property of Money Bags, subject
to the rights of BUE, or BUE's assignee or transferee.
We recognize that wearing either hat, Segal could acquire no
greater interest in the gondola system than his transferor had.
See LA. CIV. CODE ANN. arts 2620, 3142 (West 1952). The rights that
Segal has in the lease are thus equivalent to the rights that MART
had in the lease. Money Bags, however, conflates the interest that
Segal had in the gondola system through his purchasing the chattel
mortgage and subsequently foreclosing on it at the execution sale
with Segal's purchase of MART's interest as lessee under the lease.
While Segal could only acquire the rights that BUE had in the
chattel mortgage, and BUE could only acquire a security interest in
the property rights that MART had, MART's property rights to the
tower do not arise from the lease. MART did not acquire the
gondola system from or through Money Bags. MART independently
acquired an ownership interest in the gondola system, not simply a
right of possession as a lessee.5 In granting a security interest
5
Money Bags contends that MART, and subsequently Segal, had
only the dominium utile of the improvements until Money Bags
12
in the gondola system to BUE, MART conveyed to BUE the ownership
rights to the gondola system if a stated event occurred, namely a
default by MART. This is essentially the same right that MART
granted to Money Bags in the lease; MART conveyed to Money Bags the
ownership rights to the gondola system on a stated
occurrenceSQnamely the termination of the lease and Money Bags'
decision to retain the gondola.
The inquiry thus becomes what the district court correctly
focused onSQwhether Money Bags or Segal had the prior interest in
the gondola system. The lease and chattel mortgage were executed
concurrently. The district court noted that under Louisiana law,
chattel mortgages are effective from the date of recording. The
district court also found that Money Bags' right to claim ownership
of the tower came into existence only when the tower was erected.
See Smith v. Bratsos, 12 So. 2d 245, 248-49 (La. 1942). In Bratsos,
the Louisiana Supreme Court held that a chattel mortgage primes a
exercised its option under the lease to decide whether to retain
the tower and foundations at the termination of the lease. Money
Bags, however, does not define dominium utile; thus, we turn to
Black's Law Dictionary, which notes that in the civil law,
dominium utile means "equitable or praetorian ownership." BLACK'S
LAW DICTIONARY 486 (6th ed. 1990). It stands in contrast to
dominium directum, which in civil law means strict ownership.
Dominium directum et utile represents ownership in the manner we
normally envisage it: "The complete and absolute dominion in
property; the union of the title and the exclusive use." Id.
Money Bags' assertion that MART had only the dominium utile (or
right of possession) of the gondola system mischaracterizes
MART's interest. By necessity, if MART had only the dominium
utile until the lease's end, someone, presumably Money Bags, must
have retained the dominium directum. The Money Bags' lease,
however, clearly provides that the towers shall become the
property of lessor "at the termination of the lease." Money
Bags' characterization of MART's and Segal's interest, besides
having no adequate support in Louisiana law, appears illogical in
light of this provision in the lease.
13
lessor's lien where "the mortgage on the chattel was recorded prior
to the time the chattel was placed in the leased premises." Money
Bags contends forcefully that Bratsos is not applicable because it
has not asserted a lessor's lien. Despite this distinction, we
find Bratsos convincing. Bratsos stands for the general
proposition that a security interest arising from a chattel
mortgage has priority over a lessor's interest in the chattel under
a lease if the mortgage is perfected before the chattel is placed
on the land. In Bratsos itself, the Louisiana Supreme Court
rejected the contention that a prohibition in the lease against
installing equipment subject to a chattel mortgage that would take
precedence over the lessor's lien affected the rights of the
mortgagee and prevented him from claiming a prior interest. Id.
The court noted that "[t]he violation of such a provision in the
lease might be grounds to set aside or annul the lease, but it
could not affect third parties who held a mortgage on a chattel
before the chattel was placed in the leased premises." Id. The
provision in the Money Bags' lease is functionally similar to the
prohibition in Bratsos; both attempt to preserve the lessor's claim
to chattels placed on the land that arises on termination of the
lease. We refuse to find, following Bratsos, that such a provision
in the lease displaces the chattel mortgagee's claim.
In this case, the record reflects that the movables were not
placed on the land and work did not begin on the systemSQall of
which was done by MART or its contractorsSQuntil after the chattel
mortgage was recorded and perfected. Under the reasoning of
Bratsos, BUE's interest in the gondola system was thus senior to
14
Money Bags'; Segal inherited BUE's interest in the chattel
mortgage, unencumbered by any interest of Money Bags. Money Bags
focuses solely on Segal's rights and obligations under the lease;
it does not address Segal's rights under the chattel mortgage.
While Money Bags concedes that Segal took in two different
capacities, it ignores that crucial fact in focusing on the lease
as the sole source of Segal's rights.
B. Segal's purchase of the lease
We must next address whether Segal, by acquiring the lease at
the execution sale, became obligated to remove the foundations and
return the property to its original condition under and by virtue
of the terms of the lease. Instead of foreclosing separately on
the gondola system and the lease and holding separate execution
sales, Segal caused one writ of execution to be issued and an in
globo sale to be held. Segal, among other things, purchased the
lease at the execution sale, apparently because he was not
convinced that it was an unarguable nullity and wanted to prevent
someone else from purchasing the lease and attempting to claim some
rights to the gondola system under the lease.
The lease is clear that any successor to MART's interest under
the lease is obligated to the same extent as MART. While Segal is
in the strictest sense a successor, we question whether a successor
to the lessee's interest after the lease has terminated for all
intents and purposes is a successor within the meaning of the lease
required to discharge the obligations of the lease. The district
court resolved this issue in favor of Segal. The district court
specifically refused to find that the lease had wholly terminated
15
on its own, necessitating the judicial dissolution of the lease.
However, the district court reasoned that because the gondola had
not been used for over three years at the time Segal acquired the
lease, Money Bags had possessed the unconditional right to procure
dissolution of the lease long before, and ever after, Segal
acquired it. Segal had thus in actuality not acquired any rights
under the lease because any time Segal attempted to assert a right,
Money Bags could have the lease dissolved. The district court
accordingly refused to impose the obligations under the lease on
Segal because it would be inequitable.
We do not disturb this conclusion. We note after reviewing
the record that Segal never claimed a right to the gondola system
under the lease or represented that the lease was still effective.
Indeed, in the above-mentioned October 12, 1989, letter from
Segal's counsel to Money Bags, Segal indicated specifically that he
did not feel bound by any lease between Money Bags and a third
party. Additionally, we note that before Segal had even purchased
the lease at the execution sale, Money Bags had sued MART in
Louisiana state court to have the lease dissolved. Segal could
never enjoy the benefits of or any rights under the lease because
Money Bags could dissolve the lease at any time, and therefore
Segal's mere purchase of the lease at the foreclosure did not bind
him to personally discharge the lessee's removal obligations under
the lease. Cf. Grace-Cajun Oil Co. No. 3 v. MBank, 882 F.2d 1008,
1012 (5th Cir. 1989).
16
C. Article 493
Money Bags' last argument is that if we reject its claims
based on the terms of the lease, nevertheless Segal is still
obligated to remove the foundations under article 493 of the
Louisiana Civil Code. Article 493 provides:
"Buildings, other constructions permanently attached
to the ground, and plantings made on the land of another
with his consent belong to him who made them. They
belong to the owner of the ground when they are made
without his consent.
"When the owner of buildings, other constructions
permanently attached to the ground, or plantings no
longer has the right to keep them on the land of another,
he may remove them subject to his obligation to restore
the property to its former condition. If he does not
remove them within 90 days after written demand, the
owner of the land acquires ownership of the improvements
and owes nothing to their former owner." LA. CIV. CODE
ANN. art. 493 (West Supp. 1992).6
The Louisiana Supreme Court has discussed article 493:
"[T]his article fills a gap in the code, which previously
had neglected to specify the rights and obligations
between the owner of the improvements and the owner of
the ground when their legal relationship terminated.
This paragraph may apply when a lease expires . . . . It
gives the owner of the improvements the right to remove
them, but if he does not do so ninety days after written
demand, the owner of the land acquires ownership of the
improvements. It does not give the new owner of the
improvements the right to compel removal by the old
6
We note that this version of article 493 was enacted in
1984, after the lease and chattel mortgage had been executed.
The previous version of article 493 had no provision requiring
the owner of improvements to restore the property if he removed
the improvements. While it is not clear that the amended version
of article 493 should apply to relationships that existed before
1984, neither of the parties have questioned its applicability in
this case. Additionally, we note that the Louisiana Supreme
Court has applied the amended article 493 in a situation where a
servitude agreement was entered into in 1955 and allegedly
terminated after 1984. See Guzzetta v. Texas Pipe Line Co., 485
So. 2d 508, 511 (La. 1986). Accordingly, we assume that the
amended article 493 applies.
17
owner, nor to recover payment for the costs of removal."
Guzzetta v. Texas Pipe Line Co., 485 So. 2d 508, 511 (La.
1986) (emphasis added).
Because MART made the improvements with Money Bags' consent,
MART, and subsequently Segal, was the owner of the improvements
under article 493. After the lease terminated, Segal had the right
to remove the gondola system "subject to his obligation to restore
the property to its former condition." Thus, article 493 affords
Segal the relief he is seeking in this lawsuit: he has the right
to remove the towers. If Segal does not remove the improvements,
Money Bags can demand removal in writing, and 90 days after such
demand, Money Bags, as owner of the land, acquires ownership of the
improvements without owing any compensation to Segal. However,
under article 493, Money Bags has no right "to compel removal by
the old owner, nor to recover payment for the costs of removal" of
the gondola system. Guzzetta, 485 So. 2d at 511; see also
Symeonides, Developments in the Law: 1983-84, Property, 45 LA. L.
REV. 541, ___ ("Under new article 493, . . . the landowner does not
have the right to force removal at the builder's expense . . . .").
Compare LA. CIV. CODE ANN. art. 495 (providing the owner of an
"immovable," to which another consensually attaches or incorporates
things that become component parts of the immovable, with the right
to have the improvements removed at the expense of the person who
made them).7 Money Bags sole remedy is to retain the improvements
7
Money Bags has not relied on Art. 495. Under La.R.S. 9:5357
a movable subject to a chattel mortgage that is installed on
immovable property so as to become immovable nevertheless "shall
be and will remain movable insofar as the mortgage upon it is
concerned."
18
without incurring any obligation to pay for them. As noted by a
commentator, under new article 493, "it seems that in the case of
improvements which are valueless, yet costly to remove, the
landowner is at the mercy of the builder, since he cannot force
removal at the builder's expense." Symeonides, 45 LA. L. REV. at
___.
We also hold that in this particular setting Segal is not
required to remove "all or nothing" under article 493. Segal wants
to remove the gondola towers, which are readily and designedly
separable from the foundations, without being required to remove
the foundations, which are anchored by underground pilings. While
we could unearth no Louisiana case or scholarly writing addressing
this issue and it is not expressly covered by article 493, we
conclude that, on the facts of this case, such a course appears to
be permissible under the general structure of article 493. Under
article 493, if Segal chose not to remove any portion of the
gondola system from Money Bags' land, Money Bags could not force
Segal to remove the system or be reimbursed for the costs of
removal. On these facts, it appears that Segal can remove the
towers without damaging the foundations. While the foundations
likely have little utility except as part of a gondola or similar
system, removing the towers does not impair Money Bags' ability to
replace towers on the foundations at some point in the future.
Because partial removal of the system by Segal does not damage what
remains on Money Bags' land, we find it inconsistent with the
overall structure of article 493 to afford Money Bags a right to
force removal if Segal chooses to remove part of the system where
19
Money Bags would not be afforded a similar right if Segal chose not
to remove anything.
II. Segal v. Money Bags and Kern
A. Interference with business relations
Segal asserts that when Money Bag's attorney wrote the above-
referenced letter of October 13, 1989, Segal was prevented from
removing the westbank tower and from forming a profitable
relationship with Corpus Christi to place the gondola system at the
aquarium there. Following the bench trial, the district court
found that Segal failed to establish a claim because he did not
show any communications between Money Bags or Kern and officials in
Corpus Christi. The district court also found that Segal failed to
show that his negotiations with officials in Corpus Christi had
progressed to the stage where interference would have been
tortious: "Segal's negotiations with Corpus Christi were only in
the embryonic stage when Segal himself terminated them."
Segal contends that Louisiana courts have recognized a tort of
interference with business relations consistent with that found in
RESTATEMENT (SECOND) OF TORTS § 766B. Section 766B provides:
"One who intentionally and improperly interferes with
another's prospective contractual relation (except a
contract to marry) is subject to liability to the other
for the pecuniary harm resulting from loss of the
benefits of the relation, whether the interference
consists of
"(a) inducing or otherwise causing a third person
not to enter into or continue the prospective relation or
"(b) preventing the other from acquiring the
prospective relation."
Segal does not dispute the district court's conclusion that he has
failed to state a claim under section 766B(a), but asserts that he
20
has stated a claim under section 766B(b).
Louisiana courts have recognized a cause of action for
tortious interference with business. See Dussouy v. Gulf Coast
Inv. Corp., 660 F.2d 594, 601 (5th Cir. 1981) (citing Graham v. St.
Charles St. Railroad Co., 47 La.Ann. 1656, 18 So. 707 (1895)).
This tort does not appear to be as broad as it is under the
RESTATEMENT or as Segal urges. See Nowling v. Aero Services Intern.,
Inc., 752 F. Supp. 1304, 1311-12 (E.D.La. 199). In Louisiana, the
delict is based on the principle that the right to influence others
not to deal is not absolute. See Ustica Enterprises, Inc. v.
Costello, 434 So. 2d 137, 140 (La. App. 5th Cir. 1983); see also
Muslow v. A.G. Edwards & Sons, Inc., 509 So. 2d 1012, 1020 (La.
App. 2d Cir. 1987), writ denied, 512 So. 2d 1183 (La. 1987). We
summarized in Dussouy that "Louisiana law protects the businessman
from `malicious and wanton interference,' permitting only
interferences designed to protect a legitimate interest of the
actor." Dussouy, 660 F.2d at 601. "Thus, the plaintiff in a
tortious interference with business suit must show by a
preponderance of the evidence that the defendant improperly
influenced others not to deal with the plaintiff." McCoin v.
McGehee, 498 So. 2d 272, 274 (La. App. 1st Cir. 1986) (citing
Ustica, 434 So. 2d at 140). The district court properly held that
because Segal had made no showing that Kern or Money Bags
influenced third parties (i.e., those representing Corpus Christi)
not to do business with Segal, Segal has not stated a claim within
the present construct of the Louisiana tort. As a federal court
sitting in diversity, we decline to significantly expand the scope
21
of this very limited form of recovery. See Mitchell v. Random
House, Inc., 865 F.2d 664, 672 (5th Cir. 1989) (declaring that "in
diversity cases, `it is not for us to adopt innovative theories of
recovery or defense for . . . [Louisiana] law, but simply to apply
that law as it currently exists'") (quoting Galindo v. Precision
American Corp, 754 F.2d 1212, 1217 (5th Cir. 1985)).
B. Conversion
Conversion is the commission of a wrongful act of dominion
over the property of another in denial of or in a manner
inconsistent with the owner's rights. Security Home Mort. Corp. v.
Bogues, 519 So. 2d 307 (La. App. 2d Cir. 1988). Segal argues that
Kern and Money Bags converted his property, namely the westbank
tower, by refusing to grant him permission to remove the tower on
October 13 and by filing a writ of attachment on the property in
order to gain jurisdiction over Segal. The district court
determined, following the bench trial, that neither act constituted
a conversion. First, the district court found that "Money Bags did
not unequivocally tell Segal he could not come onto its property."
Specifically, the district court noted that Segal's counsel had
informed Money Bags that his unnamed client did not consider
himself bound by the lease with MART, which contained provisions
requiring that liability insurance be obtained before any
demolition of the gondola system proceed. The district court found
that Money Bags made a reasonable inquiry concerning Segal's
removal of the tower and procurement of insurance, but "immediately
after questioning Segal's right to remove the tower without regard
to the foundation, Money Bags was presented with a demand for
22
$15,000,000 for a mere three-day delay in granting access to its
property." The district court further found that "Money Bags was
not unreasonable in seeking some type of insurance or other
protection against potential liability claims as land owner in
connection with the tower removal." With regard to the second
claim, the district court found that "[t]he filing of the non-
resident attachment suit was not an act inconsistent with Segal's
ownership." The court noted that in filing the attachment, Money
Bags had to allege that the property was owned by Segal and that
conversion cannot arise from the exercise of a legal right.
The district court was not clearly erroneous in finding that
Money Bags did not convert Segal's property. We first address the
conversion claim based on what Segal characterizes as the wrongful
attachment. Attachment is a proper method of obtaining
jurisdiction over a party. LA. CIV. CODE ANN. art. 9. Once Segal,
a nonresident, appeared by filing a counterclaim and thus submitted
to the jurisdiction of the trial court, Money Bags dismissed the
attachment. Conversion cannot arise from the exercise of a legal
right. Commercial Credit Equipment Corp. v. People's Loan Serv.,
Inc., 351 So. 2d 852 (La. App. 2d Cir. 1977); Delort Hardware Co. v.
Peoples Bank & Trust, 490 So. 2d 547 (La. App. 4th Cir. 1986).
Segal's claim that Money Bags converted his property by
denying him access to remove the tower gives us a little more
pause. Ultimately, however, we hold that the district court's
finding that Money Bags did not unequivocally deny Segal access to
the land is not clearly erroneous. The letter from Money Bags'
counsel to Segal dated October 13, 1989, is, when viewed in its
23
entirety, clearly an invitationSQalmost a pleaSQto negotiate. The
letter requests a response detailing Segal's name and address and
any authority besides the lease that Segal relied on in claiming a
right to go on the land or remove the towers. Finally, we note
that a careful reading of the letter reveals that Money Bags'
counsel did not deny Segal entry on the land, but instead simply
declined to affirmatively grant Segal permission to enter and
expressly stated that Money Bags was "willing to reconsider its
position based upon your response to this letter." There is a
distinction, albeit a fine one, between refusing someone entry and
not granting permission to enter. There was no evidence either of
any threat of any kind or of any sort of obstruction or anything
similar by Money Bags. It simply declined to make an affirmative
grant of permission.
Nor was the district court clearly erroneous in finding that
Kern's reasonable concerns about insurance prompted him to decline
to grant Segal permission to enter his land and remove the towers.
Money Bags' lease with MART specified that before the gondola was
demolished, a specific plan and insurance must be provided. While
the district court subsequently determined that Segal was not bound
by the lease with MART, Segal had purchased the lease and it was
not wholly clear on October 13, 1989, that Segal was not bound by
it. Additionally, the existence of the gondola towers alone, and
certainly their removal, presented a real threat of injury making
insurance a necessary concern. Given Kern's reasonable concerns
about injury and the need for insurance, Kern's insistence that
Segal obtain insurance before Money Bags would grant permission for
24
entry to remove the towers is not a wrongful act inconsistent with
Segal's rights.8 The land belonged to Money Bags, and Segal had no
absolute, unfettered right of entry onto it, but only an implied
right of reasonable entry for purposes of proper removal of the
towers.
Conclusion
Concluding that neither Money Bags nor Segal has demonstrated
reversible error, we affirm.
AFFIRMED
8
Segal contends that Kern's concerns about insurance were
never communicated to him. The district court, however, could
legitimately have found otherwise. Segal testified at the bench
trial that Kern told him about the insurance and was always
talking about insurance; Segal simply discounted Kern's talk
about insurance as a mere negotiating ploy.
25