Oil Mop LLC v. Summit Environmental Services, LLC et al

Filing 247

ORDER & REASONS that Plaintiff Oil Mop, LLC's 180 Motion for Summary Judgment is GRANTED. Defendants' and Intervenor's counterclaims are dismissed. Summit is ordered to pay $237,484.35 to Oil Mop plus costs. Because OPA does not provide for the payment of attorneys' fees in claims of this sort, the Court declines to award such payment. IT IS FURTHER ORDERED that Oil Mop's claims against all third parties, which relate to the Defendants' counterclaims, are hereby DISMISSED. IT IS FURTHER ORDERED that the Motions to Dismiss filed by Third-party Defendants 78 , 121 are DENIED as moot. Signed by Judge Eldon E. Fallon on 8/25/14. (dno)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
OIL MOP LLC
versus
SUMMIT ENVIRONMENTAL SERVICES, LLC, ET AL.

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CIVIL ACTION
No. 11-89
SECTION “L” (3)

ORDER & REASONS
Before the Court is a Motion for Summary Judgment filed by Plaintiff Oil Mop, LLC
("Oil Mop”). (Rec. Doc. 180). The Court has reviewed the briefs and applicable law and, after
holding two hearings on the motion, now issues this Order & Reasons.
I.

BACKGROUND
This case arises out of an oil spill that occurred on the Mississippi River during the early

morning hours of July 23, 2008, when a barge owned by American Commercial Lines, LLC
(“ACL-LLC”) collided with the vessel M/V TINTOMARA. Plaintiff Oil Mop was one of the
companies involved in the cleanup of the spill. Oil Mop filed suit in this Court, alleging that it
entered into a Reciprocal Services Agreement with Defendant Summit Environmental Services,
LLC ("Summit") to provide environmental services and materials to each other when needed.
(Rec. Doc. 1 at 3). Oil Mop claims that after the spill, Defendant American Commercial Lines,
Inc. (“ACL-INC”) tasked Summit with providing environmental response services. (Rec. Doc. 1
at 4). Summit organized an operation known as “Central Supply,” through which all of the Oil
Spill Response Organizations (“OSROs”) provided necessary supplies and materials for oil spill
cleanup. (Rec. Doc. 1 at 4). Oil Mop claims that it was hired to assist in this operation, pursuant
to the Reciprocal Service Agreement with Summit. Oil Mop also performed cleanup operations
related to the spill. (Rec. Doc. 204-1 at 4). ACL-LLC directed all of the OSROs to submit their

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invoices for Central Supply to Summit Contracting L.L.C. (“Summit Contracting”).1 (Rec. Doc.
204 at 4). Oil Mop claims that it regularly sent invoices for the work it performed to Summit
Contracting, however, some of the invoices were not paid. (Rec. Doc. 1 at 5). Oil Mop explains
that, pursuant the Oil Pollution Act (“OPA”), it proceeded against the Federal Oil Spill Liability
Trust Fund ("the Fund") for payment of its invoices. (Rec. Doc. 1 at 5). According to Oil Mop,
the Fund paid almost all of the invoices, but refused to pay for charges on two invoices that
amounted to $237,484.35 total. Oil Mop claims that the Fund's explanation for this non-payment
was that it reviewed documents from ACL-LLC, the designated "responsible party," which
indicated that ACL-LLC had made payments to Summit for the services in question, in the
amount of $237,484.35. (Rec. Doc. 1 at 6). Oil Mop claims that Summit misapplied these
funds, instead of giving the money to Oil Mop. (Rec. Doc. 1 at 6). Oil Mop is seeking the value
of these unpaid services and materials that it allegedly provided to the Defendants, as well as
costs and attorneys’ fees. Oil Mop claims that at all pertinent times Defendant Summit and
Defendant ACL-INC constituted a "single business enterprise," rendering both companies
liable.2
Defendants have filed answers denying Oil Mop’s allegations and also denying the
existence of any contract between Oil Mop and Summit and Oil Mop and ACL-INC. ACL-LLC
filed a complaint in intervention, alleging that it was the party that contracted with Oil Mop.
Defendants and ACL-LLC (hereinafter “Defendants”) also filed counterclaims against Oil Mop,

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Summit was wholly owned by Summit Contracting. (Rec. Doc. 204-1 at 4).
Plaintiffs allege that, at the time of the spill, the Defendant companies wholly owned
each other in the following chain of ownership: American Commercial Lines, Inc.; American
Commercial Lines, LLC; American Commercial Barge Line, LLC; Commercial Barge Line
Company; ACL Professional Services, Inc.; Summit Contracting L.L.C.; Summit Environmental
2

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alleging that Oil Mop has been overpaid and that Oil Mop owes ACL-LLC amounts paid to Oil
Mop by the Fund, for which the Fund has demanded reimbursement from ACL-LLC.
In response to the counterclaim, Oil Mop filed complaints against numerous third parties,
consisting of the sub-contractors with which Oil Mop contracted during the oil spill cleanup. On
March 2, 2012, the Court stayed all third-party claims and continued the trial without date.
II.

SUMMARY OF MOTION AND OPPOSITION
On October 15, 2012, Oil Mop moved for summary judgment in its favor, seeking: (1)

$237,484.35, the amount owed for unpaid invoices, plus interest and attorneys’ fees; and (2)
dismissal of all counterclaims against it with prejudice and at counter-claimants’ cost. Oil Mop
argues that Defendants have acknowledged their indebtedness to Oil Mop and that the record
reflects that Oil Mop’s invoices were paid by ACL-LLC to Summit. Accordingly, Oil Mop
argues that it is entitled to be compensated for those invoices. With regard to the counterclaims,
Oil Mop argues that the Oil Pollution Act ("OPA") pre-empts these claims, which may properly
be asserted as affirmative defenses in the principal action brought by the United States against
ACL-LLC.
On December 12, 2012, this Court heard oral argument on Oil Mop’s motion for
summary judgment. The Court subsequently stayed this matter pending an appeal to the United
States Court of Appeals for the Fifth Circuit in a related case entitled United States of America v.
American Commercial Lines, LLC. (Case No. 11-2076). The Fifth Circuit has now issued its
opinion and the parties in the present case have had an opportunity to brief and argue the effect
of that opinion on the issues in the present case. This Court is now ready to rule on Oil Mop’s

Services, LLC. Plaintiffs further allege that all of these companies shared officers. Defendants
dispute that ACL-INC “directly owns” ACL-LLC.
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Motion for Summary Judgment.
A.

Relevant Recent Developments in the Related Proceedings

To put this matter in perspective it is helpful to review the background of the American
Commercial Lines case which arose out of the same oil spill as the present case. Following the
oil spill on July 23, 2008, ACL-LLC entered into contracts with two other OSROs, in addition to
Oil Mop, to provide cleanup services—Environmental Safety and Health Consulting Services,
Inc. (“ES&H”) and United States Environmental Services, LLC (“USES”). (Case No. 11-2076;
Rec. Doc. 86 at 2). When ACL-LLC failed to settle or pay cleanup costs to these companies
within 90 days, as mandated by OPA, the United States paid the costs out of the Fund.
Subsequently, the United States filed a lawsuit against ACL-LLC to recover those costs. ACLLLC claimed that ES&H and USES failed to provide adequate documentation for the amount
billed to and paid out of the Fund and that the Fund overpaid those companies. ACL-LLC tried
to tender ES&H and USES as third-party defendants or, in the alternative, sought to hold them
directly liable to the extent that ACL-LLC was found liable to the United States.
The District Court in American Commercial Lines held that OPA preempts the general
maritime claims that ACL-LLC sought to assert against ES&H and USES. Therefore, the Court
dismissed the third-party complaints against those companies. ACL-LLC appealed this decision.
On July 16, 2014, the Fifth Circuit affirmed the District Court. See United States of America v.
American Commercial Lines, L.L.C., No. 13-30358; 2014 WL 3511882 (5th Cir. July 16, 2014).
The Fifth Circuit found that OPA provides the exclusive source of law for an action involving a
responsible party's liability for oil spill cleanup costs governed by OPA. The Fifth Circuit
explained that because of this, ACL-LLC does not have a cause of action against the spill
responders who exercised their statutory right to file claims with the Fund after ACL-LLC failed

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to timely pay their claims. See id. at *3. The Fifth Circuit did note, however, that:
While we find that OPA displaces ACL's alternative causes
of action against ES&H and USES, we note that both ACL and the
United States contemplate that ACL may raise its contentions in
the district court in defense to the United States' OPA recoupment
action. Should ACL establish that the Fund's payments to ES&H
and USES were unnecessary, unreasonable, or not in compliance
with the relevant statutory criteria for Fund payments and hence
were "arbitrary and capricious," it may pursue reduction of its
liability to the Fund for reimbursement.
Id. at *4.
In the present case, Defendants oppose Oil Mop’s Motion and have provided a
supplemental brief elaborating on their opposition in light of the Fifth Circuit’s recent opinion.
(Rec. Docs. 202, 240). First, Defendants argue that pursuant to the Fifth Circuit's opinion, Oil
Mop lacks standing to pursue recovery for the invoices in question. Defendants claim that when
the United States partially paid Oil Mop's claim, the United States acquired, by subrogation, all
of the rights of Oil Mop for that claim. Defendants argue that when Oil Mop accepted those
payments, it became precluded from filing any subsequent action against any person to recover
the costs or damages which are the subject of the compensated claim. (Rec. Doc. 240 at 7).
Second, Defendants claim that an important distinction exists between the present case
and American Commercial Lines. Defendant points out that in that case, the OSROs were not
seeking any additional recovery from ACL-LLC or any other party. Here, however, Oil Mop is
seeking additional recovery. Defendants argue that, pursuant to admiralty law, they should be
entitled to equitable set-off or recoupment of Oil Mop’s claim. Defendants argue that while they
may not be able to seek an affirmative claim for recovery against Oil Mop, they should be able to
assert a claim that Oil Mop has been overpaid by the Fund as a way to reduce any recovery that
Oil Mop would receive in the present lawsuit.

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Last, Defendants argue that Oil Mop's motion for summary judgment should be denied
because Oil Mop has failed to establish a breach of contract claim against Summit. Defendants
argue that Oil Mop cannot establish the existence of a governing contract. In the alternative,
Defendants argue that if Oil Mop succeeds in proving the existence of a contract, its claim for
unjust enrichment should be barred. Defendants ask the Court to deny the motion, or at least
continue it, to allow time to complete additional discovery.
III.

LAW & ANALYSIS
A.

Standard

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any, show that there is no genuine issue as
to any material fact and that the moving party is entitled to a judgment as a matter of law."
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R. Civ. P. 56(c)). "Rule 56(c)
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 the party will bear the burden of proof at trial." Id.
When considering a motion for summary judgment, the district court "will review the facts
drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm
Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find "[a] factual dispute
[to be] 'genuine' if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party [and a] fact [to be] 'material' if it might affect the outcome of the suit under the
governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989)
(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
B.

Standing

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The Court finds that Oil Mop has standing to bring the present lawsuit. As the Fifth
Circuit pointed out recently, in American Commercial Lines, "[p]ayment of any claim or
obligation by the Fund' results in 'the United States Government acquiring by subrogation all
rights of the claimant . . . to recover from the responsible party.'" American Commercial Lines,
2014 WL 3511882 at *1 (quoting 33 U.S.C. § 2712(f)). 33 C.F.R. § 136.115(a) provides that
"[a]cceptance of any compensation . . . constitutes an agreement by the claimant to assign to the
Fund any rights, claims, and causes of action the claimant has against any person for the costs
and damages which are the subject of the compensated claims . . . ." (emphasis added). To
determine what the “compensated claim” was in this case, the Court turns to the documents that
the Fund sent to Oil Mop regarding the settlement of its claim. (Rec. Doc. 180-13 at 35-38). On
March 4, 2010, the Fund sent a letter to Oil Mop stating that it had determined that “$275,942.79
is compensable for OPA claim number N08057-016.” (Rec. Doc. 180-13 at 35). Claim Number
N08057-016 was a claim for removal costs made by Oil Mop to the Fund in the amount of
$517,554.40. (Rec. Doc. 180-13 at 37). The Fund denied $241,611.61 worth of costs. (Rec.
Doc. 180-13 at 41). The Fund stated that it “denied some claimed costs of [Oil Mop] for lack of
documentation.” (Rec. Doc. 180-13 at 39). However, $237,484.35 worth of claimed costs were
denied because the Fund determined, after examining the audit performed by ACL-LLC’s audit
team, that ACL-LLC had already paid this amount for Oil Mop’s invoices to Summit, the prime
contractor of the Central Supply Station. (Rec. Doc. 180-13 at 37).
The Acceptance/Release Form that Oil Mop’s representative signed with respect to this
claim stated “I, the undersigned, ACCEPT the determination of $275,942.79 as full
compensation for the removal costs incurred by the Claimant that are listed in the ACL/NPFC
Audit . . .” (Rec. Doc. 180-13 at 36). Turning to the referenced Audit, the Fund explained its

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evaluation of Oil Mop’s claim and stated that “ACL also approved and paid Summit Contracting
for some of the costs encompassed in this claim which the NPFC s denying because ACL has
demonstrated payment was made to Summit Contracting which leaves [Oil Mop] with an issue
for non-payment by Summit.” (Rec. Doc. 180-13 at 38) (emphasis added). The Fund obtained
this information from the audit that ACL-LLC’s audit team conducted.
The language in the statute and the C.F.R., referring to “compensated claims,” coupled
with the Fund’s explanation of its partial denial of Oil Mop’s claim, support the conclusion that
Oil Mop did not assign its claim for $237,484.35 to the Fund. This is further supported by the
Fund’s express reservation of Oil Mop’s right to pursue that amount from Summit. This amount
was denied because the Fund determined that the responsible party had already paid it. The
Fund did not compensate Oil Mop, in whole or in part, for this claimed amount and Oil Mop did
not assign its right to this amount to the Fund.
C.

Recoupment

The parties do not dispute the fact that Defendants’ counterclaims against Oil Mop
should be dismissed in light of the Fifth Circuit’s recent opinion in American Commercial Lines.
2014 WL 3511882. The Defendants argue, however, that they should still be able to raise the
claim that Oil Mop was overpaid by the Fund as a defense against Oil Mop in this action. The
Defendants argue that any recovery to Oil Mop in this proceeding should be subject to a set-off,
or recoupment, based on the amount that Oil Mop has already been overpaid by the Fund.
This argument does not withstand the Fifth Circuit’s reasoning in American Commercial
Lines.

For the same reason that ACL-LLC does not have a cause of action against spill

responders who have made claims to the Fund, ACL-LLC cannot use those claims to the Fund to
decrease its liability in a completely separate lawsuit involving that same spill responder. The

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present lawsuit involves two claims by Oil Mop that were not compensated by the Fund. The
fact that Oil Mop was allegedly overcompensated for other claims, which were compensated by
the Fund, is irrelevant.

Just like the District Court and Fifth Circuit found in American

Commercial Lines, if ACL-LLC were allowed to assert this defense, it would “avoid the strict
liability that OPA places on responsible parties to pay the cleanup and removal costs” and
“would frustrate the remedial scheme of OPA, which is to encourage rapid cleanup in the wake
of an oil spill.” (Case No. 11-2076; Rec. Doc. 86). The Fifth Circuit explicitly provided that the
proper forum for ACL-LLC’s claims regarding overpayment to OSROs is in the action that was
brought by the United States for recoupment of payments made out of the Fund. ACL-LLC can
pursue reduction of its liability to the United States if the Fund’s payments to Oil Mop were
“unnecessary, unreasonable, or not in compliance with the relevant statutory criteria for Fund
payments . . . .” American Commercial Lines, 2014 WL 3511882 at *4. It would be wholly
inconsistent with the Fifth Circuit’s opinion for this Court to allow ACL-LLC to use the Fund’s
alleged overpayment of claims that are the subject of that lawsuit to decrease its liability in the
present lawsuit. If ACL-LLC were allowed to make such a set-off claim pursuant to admiralty
law, it would essentially be able to recover, through the reduction of liability, twice for the same
overpayment—once in the present lawsuit and once in the lawsuit brought by the United States.
Such double recovery would be inconsistent with the statutory scheme created in OPA, which
“provides the exclusive source of law for an action involving a responsible party’s liability for
removal costs governed by OPA.” American Commercial Lines, 2014 WL 3511882 at *3
(emphasis added).
Finally, for the same reasons stated by the Fifth Circuit, OPA’s savings clause does not
change this determination. See American Commercial Lines, 2014 WL 3511882 at *4. The

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savings clause provides that “[e]xcept as otherwise provided in this Act, this Act does not affect .
. . admiralty and maritime law . . .” 33 U.S.C. § 2751(e). The Fifth Circuit explained that “OPA
provides a procedure for submission, consideration, and payment of cleanup expenses by the
Fund when the responsible party fails to settle such claims within 90 days.” Id. Because OPA
did “otherwise provide[],” ACL-LLC’s defense against Oil Mop to recover for payments made
by the Fund, through decreased liability, cannot be saved by this clause. See id. (“As OPA did
‘otherwise provide[ ],’ ACL’s claim against ES&H and USES for return of payments made by
the Fund under OPA cannot be saved by this clause.”). Accordingly, the Court finds that ACLLLC and the Defendants cannot claim that Oil Mop was overpaid for other invoices in order to
set-off Oil Mop’s recovery in this action. Consistent with this holding, the Court finds that no
additional discovery is necessary regarding the payments, and alleged overpayments, made by
the Fund.
D.

Summary Judgment

Having dismissed the counterclaims and the set-off defense, the Court now examines Oil
Mop’s primary claim against Summit and ACL-INC. The Court finds that there are no material
facts in dispute regarding Summit’s debt to Oil Mop in the amount of $237,484.35. As part of
the oil spill cleanup efforts, Oil Mop was asked to assist in the Central Supply operation. As the
Fund explained in its Claim Summary/Determination Form, “Summit Contracting served as a
prime contractor of the central supply station for [the oil spill] and Oil Mop provided personnel
and equipment to run the station.” (Rec. Doc. 180-13 at 37). ACL-LLC admits that it directed
all of the OSROs to submit their invoices for Central Supply to Summit Contracting. (Rec. Doc.
204 at 4). Summit Contracting would receive invoices from the OSROs and would submit them
to ACL-LLC and ACL-LLC would pay Summit for these invoices. (Rec. Doc. 204-1 at 6-7).

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Defendants admit that “ACL[-LLC] paid $151,127.03 attributable to Oil Mop invoice
#N0808-099 to [Summit]” and that Summit “did not pay the $151,127.03 received from ACL[LLC] for Oil Mop invoice #N0808-099 to Oil Mop.” (Rec. Doc. 204-1 at 10-11). Similarly,
Defendants admit that ACL-LLC “paid $86,357.32 attributable to Oil Mop invoice # N0808-188
to [Summit]” and that Summit “did not pay the $86,357.32 received from ACL[-LLC] for Oil
Mop invoice # N0808-188 to Oil Mop.” (Rec. Doc. 204-1 at 12). These invoices pertained to
Oil Mop’s Central Supply services. Defendants further admit that the Fund would not pay
$237,484.35 (151,127.03 + $86,357.32) to Oil Mop because that amount had already been paid
by ACL-LLC to Summit. (Rec. Doc. 204-1 at 9).
Defendants argue that material facts remain in dispute regarding which contract governed
the work that Oil Mop performed. Oil Mop claims that its Central Supply services were
performed pursuant to a Reciprocal Service Agreement between it and Summit. Defendants
claim that the services were performed pursuant to a Master Service Agreement that Oil Mop
entered into, which had been assigned to ACL-LLC. (Rec. Doc. 204-2 at 8). This fact is
immaterial.
Assuming, as Defendants claim, that Oil Mop’s services were performed pursuant to its
contract with ACL-LLC, this does not change the fact that Summit owes Oil Mop $237,484.35.
Article 2298 of the Louisiana Civil Code, entitled “Enrichment without cause; compensation,”
codifies Louisiana’s doctrine of unjust enrichment. Article 2298 provides that “[a] person who
has been enriched without cause at the expense of another person is bound to compensate that
person.” A party must prove five elements to succeed on a claim of unjust enrichment: “(1)
defendant’s enrichment; (2) plaintiff’s impoverishment; (3) a causal relationship between the
enrichment and resulting impoverishment; (4) an absence of justification or legal cause for the

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enrichment and impoverishment; (5) no other remedy at law.” Gegenheimer v. Cajun Painting,
Inc., 689 So.2d 457, 462 (La. App. 3 Cir. 10/9/96). The Court finds that these five elements have
been met in the present case. Summit received $237,484.35 from ACL-LLC for work that Oil
Mop performed and did not pay this amount to Oil Mop. Oil Mop was clearly impoverished by
Summit’s decision not to pay this amount to Oil Mop. Not only did Oil Mop not receive the
requested funds, but Oil Mop was also precluded from recovering this amount from the Fund
because of Summit’s receipt of it. Defendants can point to no justification for Summit’s nonpayment. In fact, the Defendants’ given justification for the non-payment is that Summit ceased
to make payments to Oil Mop for Central Supply invoices when ACL-LLC learned that Oil Mop
had filed a claim with the Fund “in order to avoid the risk of double payments” to Oil Mop.
(Rec. Doc. 204 at 6). However, since the Fund denied this amount, such a risk no longer exists.
Last, if no governing contract existed between Summit and Oil Mop, as Defendants claim and
the Court now assumes, then the doctrine of unjust enrichment would be the only remedy at law,
as well as the most appropriate in this factual circumstance.
Defendants focus most of their attention on extraneous facts regarding the Fund’s
overpayment to Oil Mop for different invoices. All of the other material facts that Defendants
list as being still in dispute pertain to the Fund’s payments to Oil Mop and whether those
payments were appropriate. (Rec. Doc. 204-1 at 17-20). However, the Court has already
explained that this is irrelevant for the purposes of the present lawsuit. Accordingly, the Court
finds that there are no material issues of fact in dispute that would affect the outcome of the
present lawsuit. All that is before the Court is the two Oil Mop invoices totaling $237,484.35.
There is undisputed evidence in the record indicating that Summit owes this money to Oil Mop.
Accordingly, Oil Mop’s Motion for Summary Judgment is granted as to Summit.

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The Court agrees with Defendants that Oil Mop has not sufficiently established that
Summit, ACL-INC and ACL-LLC should be treated as a single business enterprise. However,
the Court does not find this material. Summit is liable to Oil Mop for $237,484.35. Any
arrangement that ACL-INC and/or ACL-LLC have with Summit regarding indemnification can
be worked out between those companies.
IV.

CONCLUSION
For the foregoing reasons, IT IS ORDERED that the Motion for Summary Judgment

(Rec. Doc. 180) is hereby GRANTED.

Defendants’ and Intervenor’s counterclaims are

dismissed. Summit is ordered to pay $237,484.35 to Oil Mop plus costs. Because OPA does not
provide for the payment of attorneys’ fees in claims of this sort, the Court declines to award such
payment.
IT IS FURTHER ORDERED that Oil Mop’s claims against all third parties, which
relate to the Defendants’ counterclaims, are hereby DISMISSED.
IT IS FURTHER ORDERED that the Motions to Dismiss filed by Third-party
Defendant’s (Rec. Docs. 78, 121) are DENIED as moot.

New Orleans, Louisiana, this 25th day of August 2014.

__________________________________
UNITED STATES DISTRICT JUDGE

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