RLB Contr v. Genesis Engy ( 2021 )

Case: 20-20540 Document: 00515959587 Page: 1 Date Filed: 07/30/2021
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
July 30, 2021
No. 20-20540 Lyle W. Cayce
Clerk
In re: In the Matter of the Complaint of RLB
Contracting, Incorporated, Owner of M/V Bayou
Chevron, and Owner of M/V Johnathon King Boyd, for
Exoneration from or Limitation of Liability
RLB Contracting, Incorporated,
Petitioner—Appellee,
versus
Genesis Energy, L.P.,
Claimant—Appellant.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:18-CV-3844
Before Haynes, Graves, and Willett, Circuit Judges.
Per Curiam:*
*
Pursuant to 5th Circuit Rule 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opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
Case: 20-20540 Document: 00515959587 Page: 2 Date Filed: 07/30/2021
No. 20-20540
In 2018, a dredging barge owned by RLB Contracting, Inc. (“RLB”),
allegedly allided with a submerged gas pipeline, resulting in a fire that
destroyed the barge. RLB thereafter filed an action for exoneration or
limitation of liability in federal district court. Genesis Energy, L.P.
(“Genesis”) filed a negligence claim against RLB in this action, asserting that
it was the owner of the pipeline. This assertion went unchallenged, and the
case proceeded.
Over a year and a half later, RLB filed a motion to dismiss under
Federal Rule of Civil Procedure 12(b)(1), claiming that subsidiaries of
Genesis, not Genesis itself, owned and operated the pipeline. Genesis
argued that it was a proper party but also moved for leave to amend its claim
to join the relevant subsidiaries as co-claimants under Federal Rule of Civil
Procedure 17(a)(3).
Despite RLB’s express statement that it was not asserting a Federal
Rule of Civil Procedure 17(a) real-party-in-interest claim, the district court
construed RLB’s motion to dismiss as making that argument. Applying the
Rule 17(a) framework, the district court determined that RLB’s motion to
dismiss was timely and that Genesis’s claim properly belonged to its
subsidiaries, not Genesis. The district court further determined that Genesis
lacked a reasonable basis for its failure to name the correct parties, and
accordingly denied its motion to amend. Genesis timely appealed. 1
On appeal, both parties accept that Rule 17 (rather than Rule 12(b)(1))
provides the proper framework. RLB offered little explanation for why it
waited so long to file the motion to dismiss despite having the documents it
claimed supported the argument for about a year. A Rule 17(a) motion is
1
The district court had jurisdiction under 28 U.S.C. § 1333. We have appellate
jurisdiction under 28 U.S.C. § 1291.
2
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No. 20-20540
timely “so long as joinder of the real party in interest remains practical and
convenient.” In re Signal Int’l, LLC, 579 F.3d 478, 488 (5th Cir. 2009).
Given the fact that the usual time for amendment had passed, 2 we conclude
that the district court should not have found the motion to dismiss timely
while simultaneously denying Genesis the time to amend.
Even setting aside the timeliness of the motion to dismiss, we
conclude that the district court should have permitted Genesis to amend. 3
Under Rule 17(a)(1), “[a]n action must be prosecuted in the name of the real
party in interest.” However, if a defendant objects under Rule 17(a)(1), Rule
17(a)(3) permits the real party in interest to “ratify, join, or be substituted
into the action.” A district court abuses its discretion by denying a Rule
17(a)(3) motion if the error in naming the correct party was due to an
“understandable mistake.” Wieburg v. GTE Sw., Inc., 272 F.3d 302, 308 (5th
Cir. 2001); see also Rideau v. Keller Indep. Sch. Dist., 819 F.3d 155, 165–66 (5th
Cir. 2016) (explaining that a “good-faith, nonfrivolous mistake” compels
ratification, joinder, or substitution under Rule 17(a)(3)).
Here, the real-party-in-interest determination was complicated by,
among other things, Genesis’s belief that its position as a parent, its corporate
structure, and its debtor status, together with the United States Coast
Guard’s assertion that Genesis itself was liable for the costs of removing
2
Indeed, prior to filing its motion to dismiss, RLB had filed a motion for entry of
default against unknown claimants, which the district court granted, thereby barring any
new claimants from joining the action. Consequently, at the time RLB filed its motion to
dismiss, it was impossible for Genesis to join its subsidiaries without intervention by the
district court.
3
We review for abuse of discretion. Wieburg v. GTE Sw., Inc., 272 F.3d 302, 308
(5th Cir. 2001). Our review is guided by the well-established principle that “[t]he Federal
Rules are diametrically opposed to a tyranny of technicality and endeavor to decide cases
on the merits.” Amberg v. FDIC, 934 F.2d 681, 686 (5th Cir. 1991).
3
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No. 20-20540
pollution caused by the allision, supported its status as a proper party (a
position it still holds while willing to and desirous of joining the subsidiaries).
Moreover, there is no evidence that Genesis acted in bad faith, nor that
permitting its subsidiaries to join the action would meaningfully prejudice
RLB (or even delay the case). Accordingly, the district court abused its
discretion by denying Genesis’s motion to amend.
We REVERSE and REMAND to permit the joinder of Genesis’s
subsidiaries and for further proceedings consistent with this opinion.
4