D & S Marine Services, L.L.C. v. Lyle Properties ( 2013 )

Case: 12-31263 Document: 00512444849 Page: 1 Date Filed: 11/18/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 12-31263 November 18, 2013
Lyle W. Cayce
D&S MARINE SERVICES, L.L.C., Clerk
Plaintiff - Appellee
v.
LYLE PROPERTIES, L.L.C.,
Defendant – Third Party Plaintiff –
Appellee – Appellant
v.
LAWSON ENVIRONMENTAL
SERVICE, L.L.C.
Third Party Defendant - Appellant
Appeals from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:11-CV-508
Before STEWART, Chief Judge, and DeMOSS and CLEMENT, Circuit Judges.
PER CURIAM:*
In this contract dispute between Plaintiff D&S Marine Services, L.L.C.
(D&S) and Defendant / Third-Party Plaintiff Lyle Properties, L.L.C. (“Lyle”),
Lyle filed a third-party complaint against Third-Party Defendant Lawson
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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Environmental Services, L.L.C. (“Lawson”), who Lyle claims is ultimately
liable under the contract. The district court granted summary judgment
against Lyle and in favor of D&S, and later found Lawson liable to Lyle in a
bench trial. Lawson appeals the district court’s: (1) denial of its motion to
transfer for purposes of consolidation with the Deepwater Horizon
Multidistrict litigation or, in the alternative, sever and stay the action between
Lawson and Lyle; (2) failure to dismiss Lyle’s claims as waived; and (3) grant
of summary judgment in favor of D&S on damages. Lyle appeals the district
court’s grant of interest to D&S for the amount owed under the contract. We
AFFIRM the judgment, but REVERSE the award of interest.
FACTS AND PROCEEDINGS
On July 11, 2010, Lawson entered into a Master Service Contract with
British Petroleum Exploration and Production, Inc. (“BP”) to assist with the
clean-up from the Deepwater Horizon oil spill. On July 12, 2010, D&S leased
the tugboat M/V Dustin D to Lyle. The D&S / Lyle contract was drafted by
D&S’s attorneys, and provided that Lyle would lease the tugboat from July 12,
2010 through January 12, 2010 (184 days) at a rate of $4,200/day.
Later on July 12, Lyle leased the same tugboat to Lawson at a rate of
$4,800/day. Besides the increased rate, the Lyle / Lawson contract was
identical to the D&S / Lyle contract. Both contracts leased the Dustin D for a
term of 184 days and required 90 days written notice for termination. The
contracts also provided that once a vessel is delivered, cancellation would not
be effective until the specified term expired and the vessel was redelivered.
The contracts further stated that any modifications could only be done in
writing with the consent of both parties. Neither contract mentioned BP.
The Dustin D was immediately deployed for work. Sometime around
October 2, 2010, BP terminated its contract with Lawson, ending Lawson’s
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need for the Dustin D. Without written notice, Lawson terminated its contract
with Lyle on October 2, 2010. On October 4, Lyle unilaterally returned the
Dustin D to D&S, also without written notice or following the cancellation
procedures. Following its return, D&S was able to find some alternative work
for the Dustin D, and eventually sold the tugboat on December 12, 2010. No
further invoices were sent to Lyle following the return of the Dustin D.
Three months later, D&S sent a letter to Lyle demanding payment for
the remainder of the contract by February 18, 2011. The two parties met, but
were unable to reach an agreement. D&S filed a complaint against Lyle in the
Eastern District of Louisiana on March 3, 2011, seeking payment under the
contract from October 4—the date the boat was returned in breach of the
contract—through December 12—the date the boat was sold. Lyle answered
and filed a third-party complaint against Lawson, alleging that Lawson was
responsible for the breach of contract and seeking (1) indemnification from
D&S and (2) payment of the additional daily rate Lyle would have collected
during the same time period.
D&S moved for partial summary judgment against Lyle on the issue of
liability under the contract. Lyle did not oppose the motion, and summary
judgment on liability was granted in favor of D&S. D&S then sought summary
judgment on damages, which Lyle opposed on the grounds that it would be
impossible to determine the actual loss as a matter of law. The district court
granted D&S’s motion and awarded damages against Lyle in the amount of
$247,674.40, plus 1.5% monthly interest.
While D&S’s motion on damages was pending, Lawson filed a “Motion to
Transfer for the Purpose of Eventual Consolidation” with the Deepwater
Horizon Multidistrict Litigation (2:10-md-02179) or, in the alternative,
“Motion to Sever and Stay” Lyle’s claim against Lawson until the resolution of
the Deepwater Horizon MDL. The district court denied those motions.
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Following the district court’s grant of summary judgment on damages in favor
of D&S, both Lyle and Lawson filed for summary judgment in their third-party
dispute. These motions were denied, and the case proceeded to trial, where
the district court awarded Lyle $310,674.40, without interest. It also entered
a $247,674.40, plus 1.5% monthly interest, judgment against Lyle and in favor
of D&S to satisfy its earlier summary judgment award.
Lawson timely appealed, arguing that the district court: (1) abused its
discretion in failing to transfer or stay; (2) erred by failing to dismiss Lyle’s
claims as waived under the terms of the charter agreement; and (3) erred in
granting summary judgment on contractual damages. Lyle cross-appealed,
claiming that D&S was not entitled to 1.5% monthly interest under the
charter.
D&S responded, arguing: (1) that Lawson lacks standing to challenge the
district court’s grant of summary judgment between D&S and Lyle; (2) the
district court correctly denied Lawson’s motion to transfer; and (3) that the
district court correctly found against Lyle on summary judgment for damages.
STANDARD OF REVIEW
This court will reverse a denial of a 28 U.S.C. § 1404(a) motion to transfer
venue if the district court failed to correctly construe and apply the relevant
statute, or to consider the relevant factors incident to ruling upon the motion,
or otherwise abused its discretion in deciding the motion. Castanho v. Jackson
Marine, Inc., 650 F.2d 546, 550 (5th Cir. Unit A June 1981). We review all
questions concerning venue under the abuse of discretion standard. United
States v. Asibor, 109 F.3d 1023, 1037 (5th Cir. 1997).
We review the district court's denial of a motion for severance for abuse
of discretion. United States v. Stouffer, 986 F.2d 916, 924 (5th Cir. 1993). “A
district court's decision to stay a proceeding is generally reviewed for abuse of
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discretion.” Kelly Inv., Inc. v. Cont'l Common Corp., 315 F.3d 494, 497 (5th
Cir. 2002) (internal citation omitted). “However, to the extent that such a
decision rests on an interpretation of law, the review is de novo.” Id.
We review the district court's grant of summary judgment de novo,
applying the same standards as the district court. In re Settoon Towing,
L.L.C., 720 F.3d 268, 275 (5th Cir. 2013). Summary judgment is appropriate
when “the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a). We must view all facts and evidence in the light most favorable to the
non-moving party when considering a motion for summary judgment.
Dameware Dev., L.L.C. v. Am. Gen. Life Ins. Co., 688 F.3d 203, 206-07 (5th Cir.
2012).
DISCUSSION
I. Lawson’s Motion to Transfer for Purposes of Consolidation with
the Deepwater Horizon MDL
Lawson’s complaint is unclear on whether his motion to transfer was
brought under 28 U.S.C. § 1407—governing multidistrict litigation—or as a
simple motion to transfer venue under 28 U.S.C. § 1404. We will address both
alternatives.
Motions to consolidate and transfer actions as part of a multidistrict
litigation (“MDL”) are governed by 28 U.S.C. § 1407, which provides that
“[s]uch transfers shall be made by the judicial panel on multidistrict litigation
authorized by this section upon its determination that transfers for such
proceedings will be for the convenience of parties and witnesses and will
promote the just and efficient conduct of such actions.” A transfer may be
initiated in one of two ways: (1) the judicial panel on multidistrict litigation
may transfer an action of its own initiative; or (2) a party may file a motion to
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transfer and consolidate with the judicial panel on multidistrict litigation. 28
U.S.C. § 1407(c). The same rules apply if a party wishes to consolidate its case
as a “tag-along action” to a pre-existing MDL. See JPML Rule 1.1(h) (“‘Tag-
along action’ refers to a civil action pending in a district court which involves
common questions of fact with either (1) actions on a pending motion to
transfer to create an MDL or (2) actions previously transferred to an existing
MDL, and which the Panel would consider transferring under Section 1407.”).
Lawson’s motion to transfer this action for purposes of consolidation with
the Deepwater Horizon MDL was not filed with the judicial panel on
multidistrict litigation; it was filed in the Eastern District of Louisiana, which
lacks the authority to consolidate the case. See Holmes v. Grubman, 315 F.
Supp. 2d 1376, 1380 (M.D. Ga. 2004) (“Finally, the Court notes its inability and
lack of authority to transfer this action to the Southern District of New York.
Pursuant to § 1407, either a party must move the Panel or the Panel itself must
initiate a motion to transfer, which the Panel then must grant before transfer
and consolidation occurs.”). Because the district court lacked authority to
transfer the case to the MDL, its decision not to transfer the case was not an
abuse of discretion.
Regarding the district court’s alleged failure to transfer venue under
§ 1404, we observe that this action and the Deepwater Horizon MDL are both
being heard in the Eastern District of Louisiana—which has only one division.
As there was no other division to which this case could be transferred, the
district court cannot have abused its discretion in failing to do so.
Lawson appears to be arguing that this case should have been
“transferred” to the Deepwater Horizon MDL, stating “the district court
abused its discretion in denying Lawson’s motion to transfer this matter to
2:10-md-02179 [the Deepwater Horizon MDL] for purposes of eventual
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consolidation.” Lawson Br. 21. That is not a transfer of venue. It is a
consolidation which, as discussed, the district court lacked authority to order.
II. Lawson’s Motion to Sever and Stay Proceedings
Lawson argues that Lyle’s third-party claim should have been severed
and stayed pending the resolution of issues regarding BP’s responsibility in the
Deepwater Horizon MDL. Although district courts have inherent authority to
control their dockets, “only in rare circumstances will a litigant in one cause
be compelled to stand aside while a litigant in another settles the rule of law
that will define the rights of both.” Landis v. N. Am. Co., 299 U.S. 248, 255
(1936). “Whether such a circumstance exists depends on a balance between
the harm of moving forward and the harm of holding back.” Ali v. Quarterman,
607 F.3d 1046, 1049 (5th Cir. 2010)
In support of a stay, Lawson argues that D&S and Lyle’s claims are
“indistinguishable from those of other vessel charter claimants” that were
stayed as part of the MDL. Lawson further argues that these claims were
resolved as part of the MDL’s Economic and Property Damage Claims
settlement (“Settlement”), which names Lawson as a released party and
includes D&S and Lyle as “members of the certified class.” See 2:10-md-02179,
Doc. 6430-1, §§ 1.2.3 & 1.3.1.2; 2:10-md-02179, Doc. 8139 at 3; 2:10-md-02179
Doc. 6430-38, Ex. 20 at 2.
Lawson’s argument can be interpreted in two ways, both of which are
without merit. First, while Section 1.2.3 of the Settlement certainly includes
D&S and Lyle as entities that “operated a vessel in the Gulf Coast Area” at the
time of the spill, those entities are only entitled to claims under the “Economic
Damages Category.” 2:10-md-02179, Doc. 6430-1, §§ 1.2.3 & 1.3.1.2. Economic
Damages only apply to “[l]oss of income, earnings or profits suffered . . . as a
result of the DEEPWATER HORIZON INCIDENT,” defined as “the events,
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actions, inactions and omissions leading up to and including” the Deepwater
Horizon explosion and “RESPONSE ACTIVITIES, including the VoO [Vessel
of Opportunity] Program.” Id. at § 38.43. Neither D&S nor Lyle—as related
to this action—claim that their businesses lost income or profits because of the
explosion or response activities. Their claims are based upon a subsequent
breach of contract, not the Deepwater Horizon Incident.
This would appear to place D&S and Lyle in the second category of
covered plaintiffs: VoO Charter claimants. These claimants are defined as
those who “registered to participate in BP’s Vessel’s of Opportunity (“VoO”)
program and executed a VoO MASTER VESSEL CHARTER AGREEMENT
with BP, Lawson . . . or any other BP subcontractor as CHARTERER, and
completed the initial VoO training program.” Doc. 6430-1, § 1.3.1.4. But while
Lyle contracted with Lawson, and D&S may be a subcontractor of Lyle, there
is no evidence that either “completed the initial VoO training program.”
Further, the contract governing the relationships between D&S, Lyle, and
Lawson was drafted by D&S, not BP. Neither D&S nor Lyle ever signed the
“VoO Master Vessel Charter Agreement,” which is defined as “the standard
agreements utilized by BP and its agents or subcontractors to charter the
vessels available for work or service in connection with the VoO program.” Doc.
6430-1, § 38.165. Consequently, they are not VoO Charter claimants. See
§ 38.173 (defining “Working VoO Participant” as “a vessel owner who executed
a VoO Master Vessel Charter Agreement, completed the initial VoO training
program, and was dispatched or placed on-hire . . . by a Charterer.).
Because neither D&S nor Lyle are class members under the Settlement,
there is no harm in adjudicating their claims against each other, and Lyle’s
claim against Lawson, independent from the MDL. And since Lyle’s claim
against Lawson is unrelated to the MDL, and arises out of the same contract
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as D&S’s case against Lyle, the district court did not abuse its discretion in
denying Lawson’s motion to sever or in denying Lawson’s motion to stay.
III. Lyle’s Alleged Waiver of Any Remedy for Breach of Contract
Lawson contends that its contract with Lyle contains “mutual,
‘exculpatory clauses’” which “relieve each party . . . from any consequences for
any breach” of the charter agreement. In support, Lawson cites section XV,
¶ 3 of the charter agreement, which provides:
Notwithstanding anything to the contrary contained herein, it is
expressly agreed by and between the parties hereto that, regardless
of the negligence on the part of any party hereto or the
unseaworthiness, (existing or not) of any vessel, or any charter
breach, CHARTERER [Lawson] waives and releases any and all
rights against the vessel indemnities, and OWNER [D&S] and the
owners and/or operators of brokered vessels waive and release any
and all rights against the CHARTERER Indemnities [Lawson] for
any punitive, indirect, incidental, special or consequential
damages of any kind or nature (including, but not limited to, loss
of profits, loss of use, loss of hire or loss of production).
(emphasis added).
Lawson argues that the district court erred in failing to honor the parties’
clear and unambiguous intent to waive all liability for any breach of the
charter. This interpretation is erroneous. Section XV indemnifies both parties
against specific types of damages, namely “punitive, indirect, incidental,
special or consequential damages of any kind or nature (including, but not
limited to, loss of profits, loss of use, loss of hire or loss of production).” It does
not indemnify the parties against normal expectation damages, and
consequently does not bar this claim. The district court did not err in failing
to dismiss Lyle’s claims for breach of charter as waived.
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IV. Summary Judgment on Contract Damages
Lawson’s final argument is that the district court erred in awarding D&S
the entire amount of the contract for charter hire, less deductions, rather than
placing “D&S in the position it would have been had the charter not been
breached.” Lawson Br. 33. D&S argues that Lawson lacks standing to
challenge this judgment.
As a general rule, a party “may not appeal a district court’s order to
champion the rights of another, and even an indirect financial stake in another
party’s claims is insufficient to create standing on appeal.” Rohm & Hass
Texas, Inc. v. Ortiz Bros. Insulation, Inc., 32 F.3d 205, 208 (5th Cir. 1994)
(internal quotation marks omitted). Lawson attempts to challenge the district
court’s grant of summary judgment in favor of D&S—and against Lyle—on the
issue of damages. It argues that it was prejudiced by this “manifest error of
law” because it was held liable for D&S’s damages in the subsequent bench
trial against Lyle. That is not what happened. At the bench trial, the district
court made a number of factual findings—listed under the heading “Findings
of Fact”—some of which resolved questions of damages. Of the findings on
damages, the district court determined that Lawson was liable to Lyle for the
daily rate of the charter ($4,800) times the number of days in the contract (184),
or $883,200. The district court found that the Dustin D was sold for $110,400,
and deducted that from Lawson’s liability. It then found—as a finding of fact—
that D&S mitigated Lyle’s damages in the amount of $121,925.60, decreasing
Lawson’s liability to Lyle by the same amount. Finally, it found that Lawson
had already paid Lyle $340,200, reducing Lawson’s final liability to
$310,674.40.
Each of these individual calculations was determined as a question of
fact at the bench trial. Whatever the merits of those determinations, Lyle’s
liability to D&S was not “baked in” to Lawson’s calculation. Lawson’s liability
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was determined at the contractually defined rate of $4,800/day. To the extent
Lawson wanted to claim that D&S had mitigated the damages to a greater
degree than found by the district court, it was free to do that at trial. D&S’s
damages were listed as “Findings of Fact,” and Lawson does not argue that it
was collaterally estopped from relitigating those facts. Absent any relation
between how damages were determined in D&S’s motion for summary
judgment and Lawson’s bench trial, Lawson has no appealable interest in the
district court’s grant of summary judgment in favor of D&S on damages, and
lacks standing to challenge that disposition. As neither Lyle nor D&S
challenge the award of damages on appeal—Lyle appeals only the interest on
that award—we have no basis to review the district court’s ruling of partial
summary judgment in favor of D&S on damages.
V. Is D&S entitled to statutory interest and, if so, should Lyle
receive the same interest?
Lyle appeals the district court’s determination that D&S was entitled to
1.5% monthly interest on the total amount owed under the charter. D&S
argues that section IV of the charter, which states that “CHARTERER shall
pay one and one-half percent (1½%) interest per month on all receivables due
and payable to OWNER in arrears ten (10) days or more after the date of
OWNER’s invoices” entitles it to 1.5% monthly interest on the judgment from
February 18, 2011 1—the date that D&S made its demand for payment—until
present. This argument ignores the requirement of that same section that
“OWNER shall bill CHARTERER at 2108 Denley Rd., Houma, LA 70363, every
fifteen days” and interest is due on payments that are “in arrears ten (10) days
1 D&S, citing Rec. Ex. 000027-000028 (Rec. Doc. 32-5), claims that payment was
demanded on January 18, 2011. However, the document found at that citation is a letter to
Lyle dated February 9, 2011 and demanding payment by February 18, 2011. Our analysis
credits the demand date documented in the February 9 letter.
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or more after the date of the OWNER’s invoices.” D&S did not invoice Lyle as
required under the contract. Further, section IV also provides: “Should
CHARTERER contest the amount of any invoice, it shall, within twenty (20)
days from invoice receipt, notify OWNER of the contested amount and specify
the reason(s) therefor, whereupon payment of the contested amount will be
suspended until settlement of the dispute.” Although the exact timing of Lyle’s
objection is unclear, the record discloses that D&S filed suit on March 3, 2011—
13 days after the date payment was demanded—and had a meeting with D&S
at some unknown point before this suit was filed. It is clear that Lyle notified
D&S of its objection to the letter, rendering “payment of the contested
amount . . . suspended until settlement of the dispute.” Consequently, the
district court erred in granting D&S 1.5% monthly interest on its damages, as
they were not “receivables and payables due” under the contract.
CONCLUSION
The judgment of the district court is AFFIRMED on all matters except
its grant of 1.5% interest to D&S Marine Services, L.L.C. That portion of the
decision is REVERSED and REMANDED for entry of judgment in accordance
with the district court’s grant of summary judgment, but without 1.5% monthly
interest.
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