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Mardi Gras World, LLC. v. Marquette Transportation Co.

United States District Court, E.D. Louisiana

September 11, 2019

MARDI GRAS WORLD, LLC, ET AL.
v.
MARQUETTE TRANSPORTATION CO., ET AL.

         SECTION “R” (2)

          ORDER AND REASONS

          SARAH S. VANCE, UNITED STATES DISTRICT JUDGE.

         Before the Court is the motion for partial summary judgment from defendants Marquette Transportation Company Gulf-Inland, LLC, and Marquette Transportation Company, LLC (collectively, “Marquette”), on the claims for economic loss damages from plaintiff Mardi Gras World, LLC (“Mardi Gras World”).[1] Because Mardi Gras World has a proprietary interest in the damaged property, the defendants' motion is denied.

         I. BACKGROUND

         This case arises from an allision on the Mississippi River.[2] On May 7, 2018, the M/V STEVE RICHOUX, the defendants' towing vessel, allided with the Robin Street Wharf on the Mississippi River's left descending bank.[3] The municipal address for the wharf is 1380 Port of New Orleans Place, [4] and it is owned by the Board of Commissioners for the Port of New Orleans (“the Board”).[5] Mardi Gras World did not actually own any physical property damaged in the allision.[6] Rather, Mardi Gras World leases the Robin Street Wharf from the Board, [7] along with adjacent property from the Board and other lessors.[8]

         The parties entered into the lease in 2008[9] and can extend it through 2032.[10] The agreement provides Mardi Gras World with an interest in a large area of property along the Mississippi River. The lease includes the Robin Street Wharf, which covers approximately 125, 000 square feet of interior space, including “built out office and shop space, ” and approximately 25, 000 square feet of exterior space “and underlying wharf substructure.”[11] The leased premises also include approximately 270, 000 square feet of the Orange Street Wharf, [12] and over five acres of land next to the wharves.[13]Mardi Gras World can use these premises for a “Mardi Gras Museum, exhibition, office, catering, and meeting facility(ies), ” as well for “minor construction . . . related to artistic and creative activities.”[14] But it must make improvements to these premises, which “shall become the property of the Board.”[15] It also must pay taxes associated with the property.[16] It must maintain property insurance at its “sole cost and expense . . . in favor of Lessors.”[17] And it must “at its own cost, risk and expense . . . repair, replace, or restore any and all of the Leased Premises which may become the subject of loss, damage or destruction.”[18]

         Following the damage to these lease premises, Mardi Gras World[19]filed this action against Marquette.[20] Mardi Gras World alleges that the incident caused “increased and additional expenses, structural damage, property damage, delayed production, lost production, increased overhead, interruption of business, stigma, damaged reputation, loss of use, lost profits, repair costs, and other physical and economic damages not yet realized.”[21] Marquette subsequently filed a limitation complaint, [22] and the two complaints were consolidated.[23] AGCS Marine Insurance Company, Mardi Gras World's insurer, and the Board have separately intervened as claimants.[24]

         Marquette now moves for partial summary judgment on Mardi Gras World's claims for economic damages.[25] Mardi Gras World opposes the motion.[26]

         II. LEGAL STANDARD

         Summary judgment is warranted 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); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). “When assessing whether a dispute to any material fact exists, [the Court] consider[s] all of the evidence in the record but refrain[s] from making credibility determinations or weighing the evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but “unsupported allegations or affidavits setting forth ‘ultimate or conclusory facts and conclusions of law' are insufficient to either support or defeat a motion for summary judgment.” Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985) (quoting 10A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2738 (2d ed. 1983)); see also Little, 37 F.3d at 1075. “No genuine dispute of fact exists if the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party.” EEOC v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014).

         If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party “must come forward with evidence which would ‘entitle it to a directed verdict if the evidence went uncontroverted at trial.'” Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991) (quoting Golden Rule Ins. Co. v. Lease, 755 F.Supp. 948, 951 (D. Colo. 1991)). “[T]he nonmoving party can defeat the motion” by either countering with evidence sufficient to demonstrate the “existence of a genuine dispute of material fact, ” or by “showing that the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party.” Id. at 1265.

         If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See Id. at 324. The nonmovant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue for resolution. See, e.g., id.; Little, 37 F.3d at 1075 (“Rule 56 ‘mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'” (quoting Celotex, 477 U.S. at 322 (emphasis added))).

         III. DISCUSSION

         Marquette argues that, pursuant to Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927), Mardi Gras World cannot recover economic damages.[27] In Robins Dry Dock, the Supreme Court stated a rule limiting tort liability: “[N]o authority need be cited to show that, as a general rule, at least, a tort to the person or property of one man does not make the tort-feasor liable to another merely because the injured person was under a contract with that other unknown to the doer of the wrong.” 275 U.S. at 309. The Fifth Circuit has “interpreted Robins Dry Dock to mean that there can be no recovery for economic losses caused by an unintentional maritime tort absent physical damage to property in which the victim has a proprietary interest.” Amoco Transp. Co. v. S/S MASON LYKES, 768 F.2d 659, 666 (5th Cir. 1985).[28]

         Here, Mardi Gras World seeks to recover, among other things, economic losses caused by an unintentional maritime tort.[29] To proceed, therefore, Mardi Gras World must have suffered (a) “physical damage” to (b) property in which it has a “proprietary interest.” The parties do not dispute that physical damage occurred.[30] The wharf that suffered physical damage, though, was owned by the Board and leased to Mardi Gras World.[31] At issue, therefore, is whether Mardi Gras World had a “proprietary interest” in this wharf. The Court finds that Mardi Gras World's leasehold constitutes a sufficient proprietary interest to allow it to seek recovery under Robins Dry Dock for economic loss.

         A. Mardi Gras World's “Proprietary Interest” Under Its Lease

         A plaintiff need not own property outright to have a “proprietary interest” in it. See State of Veracruz v. BP, P.L.C. (In re Deepwater Horizon), 784 F.3d 1019, 1026 (5th Cir. 2015) (“The Robins Dry Dock Court itself, however, intimated that something perhaps just shy of outright ownership might suffice to show the requisite proprietary interest.”). If the plaintiff is not the actual owner of the property, though, he must be “‘tantamount' to an owner” to recover. Plains Pipeline, L.P. v. Great Lakes Dredge & Dock Co., 620 Fed. App'x 281, 285 (5th Cir. 2015) (quoting Veracruz, 784 F.3d at 1026).

         To identify whether a plaintiff's interest in property is tantamount to ownership, courts consider whether the plaintiff's rights in the property exhibit “incidents of ownership.” See Veracruz, 784 F.3d at 1026 (quoting Louisville & Nashville R.R. Co. v. M/V Bayou Lacombe, 597 F.2d 469, 474 (5th Cir.1979)). Specifically, the Fifth Circuit looks to three main factors: (1) “responsibility for repair, ” (2) “responsibility for maintenance, ” and (3) “actual possession or control.” Tex. E. Transmission Corp. v. McMoRan Offshore Expl. Co., 877 F.2d 1214, 1225 (5th Cir. 1989) (citing Bayou Lacombe, 597 F.2d at 474). Here, Mardi Gras World's interest in the wharf, as established by its lease with the Board, exhibits all three factors.

         First, Mardi Gras World has responsibility for repair of the wharf. The lease agreement between Mardi Gras World and the Board states: “Lessee [Mardi Gras World] agrees that it shall at its own cost, risk and expense promptly and with due diligence repair, replace, or restore any and all of the Leased Premises [property including the Robin Street Wharf] which may become the subject of loss, damage or destruction.”[32] Marquette acknowledges that Mardi Gras World “has broad responsibility to repair damages to the leased premises.”[33] Indeed, Marquette explicitly “does not challenge” Mardi Gras World's “claim for repair costs.”[34]

         Second, Mardi Gras World has responsibility for maintenance of the wharf. According to the terms of the lease, “Lessee shall be responsible for and shall at its own cost, risk and expense perform and pay all costs of maintenance and repairs.”[35] Indeed, “[d]uring the Term of the Lease, Lessors shall have no responsibility whatsoever to perform any construction, maintenance or repair work on the Leased Premises.”[36] The lease does require Mardi Gras World to “obtain prior written approval from the Board for any maintenance, repairs, [or] dredging.”[37] But the adjacent provisions make clear that the Board's ministerial function does not divest Mardi Gras World of the responsibility for maintaining the wharf. Indeed, the same requirement of approval for maintenance also applies to repairs, which-as noted above-Marquette does not appear to challenge.

         Third, Mardi Gras World has actual possession or control of the wharf. Black's Law Dictionary defines “actual possession” as “[p]hysical occupancy or control over property. Cf. constructive possession.” Actual Possession, Black's Law Dictionary (11th ed. 2019) (first emphasis added); accord Tex. E., 877 F.2d at 1225 (when discussing three-part proprietary interest test, examining whether company had “functional possession or control” over property (emphasis added)). Mardi Gras World's use of the property has both “an attraction component and . . . an event venue component.”[38] As an attraction, Mardi Gras World operates tours that allow the public “to see how the floats and props are constructed for Mardi Gras.”[39] As an event venue, Mardi Gras World primarily rents the premises for corporate functions.[40]Overall, these activities suggest that Mardi Gras World has physical occupancy of the property. Indeed, the lease describes Mardi Gras World as “occup[ying]” the wharf.[41] And Marquette's stipulations also identify Mardi Gras World as an “occupant[] of the Robin Street Wharf.”[42] Mardi Gras World, therefore, actually possesses the property.

         The Fifth Circuit has stated this element of the test in the disjunctive- actual possession or control. Arguably a finding that Mardi Gras World actually possesses the wharf should satisfy this prong. Nevertheless, the Court finds that the level of control Mardi Gras World exercises over the property also satisfies a conjunctive test.[43]

         Specifically, the lease states that Mardi Gras World has “complete control or ‘GARDE' over the Leased Premises.”[44] It “exercise[s] complete control or ‘Garde' over . . . access.”[45] And it has “sole liability for the condition of the Leased Premises as well as of any constructions, utilities and other improvements.”[46] Although limits on use exist, the limiting language broadly describes the purpose for which Mardi Gras World leases the property, rather than purporting to circumscribe how Mardi Gras World runs its business. For example, the lease restricts Mardi Gras World's use of the wharf to that of “a Mardi Gras Museum, exhibition, office, catering, and meeting facility(ies), ” as well as to “minor construction . . . related to artistic and creative activities.”[47] The lease also establishes safety practices consistent with these very activities. For example, “Lessee shall not use the Leased Premises for any heavy construction or any activity involving welding or use of an open flame or toxic material.”[48]

         Such reasonable restrictions do not prevent Mardi Gras World from exercising control over the wharf. Even an outright owner could encounter analogous zoning or environmental regulations circumscribing its use of property. And restrictions are not uncommon in commercial leases in general, see, e.g., 5 Alan M. Weinberger, Thompson on Real Property § 44.03 (Thomas ed. 2019), or the Board's leases in particular.[49] Overall, therefore, and when viewed in light of Mardi Gras World's possession of the property, the Court finds the level of control accorded to Mardi Gras World in the lease sufficient to qualify as an incident of ownership.

         In addition to the Texas Eastern factors, some courts have looked to the original distinction drawn in Robins Dry Dock-that between a time charterer of a ship and a demise charterer-to illustrate the concept of a proprietary interest. See, e.g., Veracruz, 784 F.3d at 1031. Specifically, the Robins Dry Dock Court found that a time charter did not confer a sufficient property interest[50] to permit recovery for economic loss. See 275 U.S. at 307-08. But “[t]he Court left open the possibility that a ‘demise' agreement might satisfy the proprietary interest requirement even if the ‘time charter' at issue in that case did not.” Veracruz, 784 F.3d at 1026 (citing Robins Dry Dock, 275 U.S. at 308).

         The Fifth Circuit has elaborated on the distinction between a time charter and a demise charter. Under a time charter, “the owner's people continue to navigate and manage the vessel, but her carrying capacity is taken by the charterer for a fixed time for the carriage of goods.” Bayou Lacombe, 597 F.2d at 473 n.3 (quoting G. Gilmore & C. Black, The Law of Admiralty § 4-1 (2d ed. 1975) [hereinafter Gilmore & Black]). Under a demise charter, on the other hand, “the charterer takes over the ship, lock, stock and barrel, and mans her with his own people.” Id. (emphasis removed) (quoting Gilmore & Black § 4-1). Under this analogy, possessing a proprietary interest sufficient to satisfy the Robins Dry Dock rule requires having “the incidents of ownership attributable to the demise-charterer.” See Bayou Lacombe, 597 F.2d at 474.

         Here, the nature of Mardi Gras World's interest in the wharf resembles that of a demise charterer's interest in a ship.[51] Mardi Gras World has “take[n] over” the wharf and “man[ned] her with [its] own people, ” Bayou Lacombe, 597 F.2d at 473 n.3 (emphasis removed) (quoting Gilmore & Black § 4-1). Indeed, Mardi Gras World is liable for the damage caused to the wharf.[52] And although Mardi Gras World cannot use the wharf entirely without restriction, “restrictions on use” also “typically” occur in demise contracts. See 2 Thomas J. Schoenbaum, Admiralty & Maritime Law § 11:3 (6th ed. Oct. 2018 update); see also, e.g., Limon v. Berryco Barge Lines, L.L.C., No. G-07-0274, 2011 WL 835832, at *7 (S.D. Tex. Mar. 7, 2011) (finding that a demise charter can have “restrictions on use” that are “not inconsistent with possession and control”). But see Bayou Lacombe, 597 F.2d at 474 (noting that under a demise charter, “the shipowner retains merely a right of reversion”).

         Indeed, “the demise charterer is analogous” to “the lessee of a house and lot.” Id. at 473 n.3 (emphasis removed) (quoting Gilmore & Black § 4-1). “Put differently, if [the plaintiff] shows that it has interests in the [property] similar to the interests it would acquire in a vessel from a demise charter or in real estate from a lease, then it can satisfy the requirements of Robins Dry Dock.” Nexen Petroleum U.S.A., Inc. v. Sea Mar Div. of Pool Well Servs. Co., 497 F.Supp.2d 787, 796 (E.D. La. 2007) (Vance, J.) (emphasis added). Here, Mardi Gras World has a lease on real estate. Consequently, to the extent such a lease mirrors the demise charter, it also should satisfy the Robins Dry Dock rule. Overall, therefore, whether viewed in terms of the three-factor Texas Eastern test, or in terms of the original Robins Dry Dock analogy that these factors attempted to illustrate, Mardi Gras World has a proprietary interest that permits it to sue for economic loss.

         Significantly, the facts of this case differ materially from those of other cases in which the Fifth Circuit found that a proprietary interest did not exist. In Texas Eastern itself, for instance, the plaintiff attempted to recover economic damages following the rupture by an anchor of a pipeline carrying natural gas. See 877 F.2d at 1219, 1223. But there, in addition to not owning the pipeline, the plaintiff neither “possess[ed] the exclusive right to use” the property, nor had “any responsibility to perform repairs” following its damage. See Id. at 1224-25. Rather, the plaintiff's responsibility was largely limited to “routine maintenance, consisting of the painting, cleaning, and inspecting” of some of the pipeline's “appurtenances.” See Id. at 1225. Here, by contrast, Mardi Gras World's rights and responsibilities under its lease are of an entirely different order. Mardi Gras World leases an expansive property[53] for a variety of its own business functions, [54] over which it has extensive improvement, [55] insurance, [56] tax, [57] repair, [58] and maintenance responsibilities.[59]

         Similarly, in Bayou Lacombe, which the Texas Eastern court analyzed, a railroad company with a “contractual right to use [a] bridge” could not recover economic damages after a vessel damaged the bridge, preventing trains from crossing. See 597 F.2d at 470. But the railroad never possessed or controlled the bridge, or contributed to its upkeep. See Id. at 474. Again, by contrast, Mardi Gras World exhibits a wholly different relationship with the wharf: Mardi Gras World's rights are far more sweeping than the “right of [a] user in the nature of an easement.” Id. at 473.

         Other cases likewise reveal that Mardi Gras World's interest in the wharf is dissimilar to circumstances where the Fifth Circuit has barred recovery of economic losses under Robins Dry Dock. See, e.g., In re Bertucci Contracting Co., L.L.C., 712 F.3d 245, 246 (5th Cir. 2013) (disallowing economic damages to residents of community affected by bridge closure following vessel allision); Dick Meyers Towing Serv., Inc. v. United States, 577 F.2d 1023, 1024 (5th Cir. 1978) (per curiam) (disallowing economic damages to boat operator following delays caused by lock failure). Indeed, the Court has found no case where Robins Dry Dock barred the economic loss claims of a plaintiff with interests of the same character as Mardi Gras World's.

         When other courts have analyzed facts similar to those here, though, they have reached the same conclusion as this Court. Specifically, the weight of the district court authority supports finding a proprietary interest arising from such a lease. See Dixie Marine, Inc. v. Q Jake M/V, No. 16-12415, 2017 WL 3600574, at *1, *8 (E.D. La. Aug. 22, 2017) (concluding that a plaintiff operating under a similar lease with the Board met all three factors and therefore had a proprietary interest in a wharf);[60]Diversified Grp., LLC v. La. Carriers, Inc., No. 12-1161, 2013 WL 2147547, at *4 (E.D. La. May 15, 2013) (concluding that “Dixie Marine has a proprietary interest in the wharf”); In re Complaint of Clearsky Shipping Corp., No. 96-4099, 1999 WL 705553, at *4-5, *7-8 (E.D. La. Sept. 8, 1999) (finding evidence of retailers' proprietary interest in spaces leased at the Riverwalk made summary judgment improper); New Orleans Steamboat Co. v. M/V ...


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