St. Bernard Parish v. Lafarge North America, Inc. et al

Filing 151

ORDER AND REASONS granting 139 Motion for Judgment on the Pleadings. Signed by Judge Ivan L.R. Lemelle. (ijg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ST. BERNARD PARISH

CIVIL ACTION

VERSUS

NO. 11-2350

LAFARGE NORTH AMERICA,
ET AL.

SECTION "B"(2)
ORDER AND REASONS

Before the Court is Defendant, LaFarge North America Inc.’s
Fed.

R.

Civ.

concerning

P.

12(c)

Plaintiff’s

Motion

for

demand

for

Judgment
tax

on

the

damages.1

Pleadings
Plaintiff,

Parish of St. Bernard, has filed an opposition.2 Defendant has
filed

reply.3

a

Accordingly,

and

for

the

reasons

enumerated

below, IT IS ORDERED that Defendant’s Motion for Judgment on the
Pleadings

is

GRANTED

and

Plaintiff’s

claim

for

“impairment

and/or loss of tax base(s) and consequent loss of tax revenue”
is hereby DISMISSED with prejudice.
I.

FACTUAL AND PROCEDURAL BACKGROUND AND CONTENTIONS
The Parish of St. Bernard (“Parish”) alleges that a barge

improperly

moored

(“Lafarge”)

facility

caused

two

at

breaches

LaFarge

broke
in

North

free
the

America,

Incorporated

during

Hurricane

Katrina

and

resulting

in

Industrial

Canal

extensive flooding and damage to the Parish.
1

Rec. Doc. No. 139.
Rec. Doc. No. 145.
3
Rec. Doc. No. 150.
2

1

Following Hurricane Katrina, several lawsuits were filed
alleging that a barge, the ING 4727, which was improperly moored
at a facility owned by Lafarge, broke free and allided with the
floodwall of the Industrial Canal breaching it in two places.
The suits also allege that extensive flooding resulted, causing
damage to numerous parties. These cases were consolidated as the
Barge

Litigation

Track

in

In

re

Katrina

Canal

Breaches

Consolidated Litigation, USDC EDLA No. 05-4182. Following denial
of class certification, four named plaintiffs were selected to
try their cases in a exemplar bench trial, which took place in
2010. After the trial, the district court issued a ruling in
January 2012, concluding that the barge could not have caused
the

breaches

and

dismissed

the

claims

by

the

four

exemplar

plaintiffs. Lafarge then moved for summary judgment as to all
remaining named plaintiffs, which motion was granted.
The

Parish

was

not

a

party

in

the

cases

that

were

consolidated in the Barge Litigation Track. After the district
court denied class certification, the Parish and other claimants
who were not yet plaintiffs entered into a Tolling Agreement
with Lafarge that suspended the statute of limitations pending
completion of the test case trial proceedings.
In August of 2011, following the district court’s dismissal
of the claims of the four exemplar plaintiffs, the Parish filed
2

suit against Lafarge in Louisiana state court. Lafarge timely
removed

the

case

to

federal

court

in

September

2011.

The

district court subsequently granted Lafarge’s motion for summary
judgment pursuant to Fed. R. Civ. P. 56. On appeal, the U.S.
Fifth

Circuit

Court

of

Appeals

reversed,

concluding

that

questions of fact precluded summary judgment.4 The matter was
remanded to the U.S. District Court for the Eastern District of
Louisiana, and transferred to this Section.5
Lafarge contends that, under maritime law, which governs
the Parish’s claims, a plaintiff claiming negligence may not
recover economic damages that do not stem from physical damage
to the plaintiff’s own property. Thus, any diminished tax base
and resulting loss of tax revenue after Katrina resulted from
damage

to

businesses—

property
who

were

owned

by

others—

dislocated

by

Parish

the

residents

storm.

The

and

Parish

therefore cannot recover tax damages in this action under
long-established tenet of federal maritime law established

a
in

Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (1927).
Robins

Dry

Dock

disallows

purely

economic

damages

that

are

caused by negligence without some physical damage to person or
property.

4
5

Rec. Doc. No. 112.
Rec. Doc. No. 114.

3

The Parish contends that it seeks to recover for economic
losses

arising

from

damage

to

Parish-owned

property,

which

damage was caused by Defendant. This property damage, in turn,
disabled

the

Parish

from

providing

governmental

services

and

protection, leaving its absent population no choice but to delay
its return and the resumption of tax-revenue generating commerce
and residency.

The property damage alleged includes: water and

sewage systems, streets, parks, utilities, health care systems
and

facilities,

Fire

Departments,

Public

works

Department,

Transit Department, Community Development Department, etc.6
II.

LAW AND ANALYSYS
a. Standard of Law: Rule 12(c) Motion for Judgment on the
Pleadings
The standard for deciding a Rule 12(c) motion for judgment

on

the

pleadings

is

the

same

as

a

Rule

12(b)(6)

motion

to

dismiss. In re Katrina Canal Breaches Litig., 495 F.3d 191, 205
(5th Cir. 2007). The Court “accepts all well-pleaded facts as
true,

viewing

plaintiff.”

Id.

them

in

(internal

the

light

quotations

most

favorable

omitted).

The

to

the

plaintiff

must plead “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 127 S.Ct. 1955, 1974, 167 L.Ed. 2d 929 (2007). “Factual

6

Rec. Doc. No. 145 at 3.

4

allegations must be enough to raise a right to relief above the
speculative level, on the assumption that all the allegations in
the complaint are true (even if doubtful in fact).” Id. at 1965.
“The court may grant judgment on the pleadings ... where it is
beyond doubt that the nonmovant can prove no set of facts in
supports of his claim that would entitle him to relief....”
Caletka v. State Farm Mut. Auto. Ins. Co., 936 F.Supp. 380, 381
(W.D. La. 1996).
b. General Maritime Tort Doctrine: Robins Dry Dock
Under general maritime tort doctrine, recovery is barred
for economic loss in the absence of physical harm. In Robins Dry
Dock, the leading “pure financial injury” case, a time charterer
sued

to

recover

profits

lost

when

the

defendant

dry

dock

negligently damaged the vessel’s propeller. 275 U.S. at 309. The
charterer sued for its loss of the use of the vessel during the
ensuing

two

week

delay.

Id.

The

U.S.

Supreme

Court

denied

recovery, holding that the charterer’s loss arose only
result

of

plaintiff

the
had

loss
no

benefit

protected

of

the

interest

contract
in

the

and

that

vessel

as a
the

itself.

Justice Holmes, writing for the Court, stated:
As a general rule...a tort to the person or property
of one man does not make the tortfeasor liable to
another merely because the injured person was under a
contract with that other, unknown to the doer of the
wrong.... The law does not spread its protection so
far.
5

Id.
Most

courts,

including

the

U.S.

Fifth

Circuit

Court

of

Appeals have read Robins Dry Dock to establish a bright line
rule

against

recovery

for

economic

loss,

caused

by

an

unintentional maritime tort absent physical damage to property.
See e.g. State of Louisiana v. M/V TESTBANK, 752 F.2d 1019 (5th
Cir. 1985)(en banc); cert. denied, 477 U.S. 903, 106 S.Ct. 3271
(1986); Getty Refining & Marketing Co. v. MT Fadi B, 766 F.2d
829 (3rd Cir. 1985). These courts have “discarded traditional
tort precepts of foreseeability and lack of remoteness in this
limited class of cases.” Getty, 766 F.2d at 832.
Three

cases

cited

by

Justice

Holmes

in

Robins

deserve

examination because they show the historical underpinnings of
the

Robins

rule:

Elliott

Steam

Tug

Co.

v.

The

Shipping

Controller, [1922] 1 K.B. 127; Byrd v. English, 117 Ga. 192, 43
S.E. 419 (1903); The Federal No. 2, 21 F.2d 313 (2d Cir. 1927).
In

Elliott

Steam

Tug,

the

British

admiralty,

under

wartime

legislative powers, requisitioned a tug. A charterer of the tug
lost

profits

because

of

the

requisitioning.

In

applying

an

indemnity statute that authorized recovery, the court noted that
the charterer could not have recovered at common law, stating:
“The charterer in collision cases does not recover profits, not
because the loss of profits during repairs is not the direct
6

consequence of the wrong, but because the consumer law rightly
or wrongly does not authorize him as able to sue for such an
injury to his mere contractual rights.” 1 K.B. at 140. In Byrd
v.

English,

the

defendant

negligently

damaged

a

utility's

electrical conduits, thus cutting off power to the plaintiff's
printing plant. The plaintiff sued for lost profits because of
loss of power, and the court denied recovery. Finally, in The
Federal No. 2, the defendant tug negligently injured plaintiff's
employee while he was working on a barge. The employer sued to
recover sums paid to the employee in maintenance and cure. The
court denied recovery and explained: “It is too indirect to
insist that this may be recovered, where there is neither the
natural right nor a legal relationship between the appellant and
the tug, even though the alleged right of action be based upon
negligence.” 21 F.2d at 314.
The bright line approach is a pragmatic approach intended
to

avoid

a

“chain

reaction”

of

economic

injuries

that

“may

produce an unending sequence of financial effects best dealt
with by insurance, or by contract, or by other business planning
devices.” Id. at 832; TESTBANK, 752 F.2d at 1023. The “critical
factor

in

character

the

application

of

the

of

interest

the

Robins

harmed’.”

holding...[is]

Vicksburg

Towing

‘the
v.

Mississippi Marine Transport, 609 F.2d 176, 177 (5th Cir. 1980)

7

(quoting Dick Meyers Towing Service, Inc. v. United States, 577
F.2d 1023, 1025 (5th Cir. 1978)).
Since Testbank, the Fifth Circuit has consistently applied
the rule limiting recovery in maritime cases to plaintiffs who
sustain physical damage to a proprietary interest. See, e.g.,
Catalyst

Old

River

Hyrdroelectric

Ltd.

Partnership

v.

Ingram

Barge Co., 639 F.3d 207, 210 (5th Cir. 2011); In re Taira Lynn
Marine Ltd. No. 5, LLC, 444 F.3d 371, 377 (5th Cir. 2006);
Reserve Mooring Inc. v. Am. Commercial Barge Line, LLC, 251 F.3d
1069, 1071 (5th Cir. 2001); IMTT–Gretna v. Robert E. Lee SS, 993
F.2d 1193, 1194 (5th Cir. 1993). The key consideration is the
character of the Parish’s interest in the properties and whether
those properties sustained any physical damage. Sekco Energy,
Inc. v. M/V Margaret Chouest, 820 F.Supp. 1008, 1014 (E.D. La.
1993).
c. Proprietary Interest & Accompanying Harm
The Parish concedes that, as a matter of law, the Parish
cannot recover economic losses if its property has not been
damaged; however, argues that it may recover for economic losses
arising from damage to Parish-owned property caused by Lafarge.
The Parish contends that Lafarge caused the Parish to suffer
damages to “a great quantity and number of parcels of immovable

8

property,

improvements

and

other

assets

and

infrastructure”

owned by the Parish.7
Indeed, the original Petition claims the Parish suffered
damages to the foregoing property, and, in addition:
physical loss and damage to infrastructure such as
water
and
sewerage
systems,
streets
and
paves
surfaces, vegetation and parks; physical loss and
damage to real property and buildings owned by St.
Bernard Parish; loss of and damage to Parish-owned
vehicles;
loss
of
and
damage
to
Parish-owned
equipment, supplies and material; loss and damage to
Parish-owned and/or operated public utilities; and
loss and damage to Parish-owned and/or operated health
care systems and facilities...8

However, the Petition also seeks recovery for “impairment
and/or loss of tax base(s) and consequent loss of tax revenue.”9
The Parish characterizes the claim as follows: “the property
damage, in turn, disabled the Parish from providing governmental
services and protection, leaving its absent population no choice
but

to

delay

its

return

and

the

resumption

of

tax-revenue

generating commerce and residency.”10 The Parish clarifies: “the
Parish

is

not

consist[ing]

of

seeking
the

to

recover

value

of

damages
property

to

its

owned

‘tax-base
by

third

parties’....”11 “Rather, the Parish is seeking to recover its

7

Rec. Doc. No. 145 at 3 (quoting Rec. Doc. No. 1-1 at 14).
Rec. Doc. No. 1-1 at 14.
9
Rec. Doc. No. 1-1 at 14.
10
Rec. Doc. No. 145 at 3.
11
Rec. Doc. No. 145 at 5.
8

9

loss

of

revenue

attributed

to

the

damage

to

the

Parish’s

buildings and property caused by Defendant.”12
When a plaintiff does incur damage to its property, as is
the case here, recovery for economic losses is allowed. Catalyst
Old River Hyrdroelectric Ltd., 639 F.3d at 211. In Vicksburg
Towing

Co.,

negligence

the

was

owner

allowed

of

a

recover

dock

damaged

for

by

economic

losses

suffered when the defendant damaged its dock.
“[T]he

distinction

property

was

between

damaged

and

recovery
recovery

by
by

defendant’s
that

it

609 F.2d 176.

an

owner

when

other,

as

applied

his
in

Robins, Dick Meyers, and M/V BAYOU LANCOMBE, was ‘meaningful,
real

and

dispositive.’”

TESTBANK,

752

F.2d

at

1024

(citing

Vicksburg, 609 F.2d at 177).
As

stated

“physical

harm

in
to

Judge
or

Garwood’s

invasion

of

concurrence
a

in

proprietary

TESTBANK,

interest

is

generally an appropriate condition for recovery of negligently
caused

economic

loss.”

Id.

at

1035.

Thus,

the

Parish

may

properly seek to recover economic losses for damage to Parish
property.
The issue is whether the Parish may be entitled to recover
lost

tax

revenue

flowing

from

damage

to

Parish

property,

flooding, and concomitant absence of residents. Lafarge relies
12

Rec. Doc. No. 145 at 5.

10

upon Corpus Christi, 71 F.3d 198, 202 (5th Cir. 1995). In that
case, a vessel collided with a maritime platform. Id. at 199.
The collision caused damage to a riser that was connected to the
platform. Id.

at 200. The riser owner directed the platform

owner to shut in its wells so that it could inspect the riser
and replace the damaged section. Id. The platform owner followed
those directions, and also flared gas to prevent a loss of its
wells. Id. The riser was inaccessible during the two weeks it
was in repair. Id. With no access to the riser, the platform
owner was not able to produce and sell its gas. Id. at 202. The
platform owner sought to recover not only damages for the loss
of

the

flared

gas,

but

also

for

damages

resulting

from

its

inability to use the riser while the riser was being repaired.
Id. at 202-03.
While the Corpus Christi court ruled that the flaring of
the gas constituted damage to the platform owner's proprietary
interest, the court did not permit the platform owner to recover
pecuniary damages flowing from its inability to use the riser
for two weeks. This case is distinguishable on the basis that in
Corpus Christi, damage was sustained by the third-party riser,
and the platform owner sought to recover for damages resulting
from its inability to use the riser while it was being repaired.
In Corpus Christi, the court stated:

11

[The platform owner’s] claimed economic loss was not
‘attendant’ to the physical damage to [the platform
owner’s] proprietary interest, the loss was instead
occasioned only by the physical injury to [the] riser,
property in which [the platform owner] had no
proprietary interest....

71 F.3d at 203.
Here, the Parish claims physical damage to its own property
and

seeks

to

recover

for

economic

losses

attendant

to

that

physical damage. The allision is claimed to have caused damage
to Parish property and a disruption in Parish services, and
therefore qualifies as physical damage for purposes of TESTBANK.
See In re Taira Lynn Marine Ltd. No. 5, LLC, 444 F.3d 371, 380
(5th Cir. 2006). Yet, to the extent the Parish seeks to recover
for a reduction in tax base, tax generating commerce and revenue
through

third

party

business

owners

and

residents,

Corpus

Christi controls, and that economic loss is not attendant to
physical damage to property owned by the Parish.
Even if this Court concluded otherwise, “simply meeting the
requirement of showing physical damage to a proprietary interest
does not automatically open the door to all foreseeable economic
consequences.”
Consolidated

Corpus

Aluminum

Christi,

71

Corp.

C.F.

v.

F.3d

at

Bean

203.

Corp.

Further,

in

(Consolidated

II), 833 F.2d 65, 68 (5th Cir. 1987), the Fifth Circuit stated:

12

We perceive a harm to be the foreseeable consequence
of an act or omission if harm of a general sort to
persons of a general class might have been anticipated
by a reasonably thoughtful person, as a probable
result of the act or omission, considering the
interplay
of
natural
forces
and
likely
human
intervention.

The

losses

resulting

from

delay

in

resumption

of

tax

revenue generating commerce and residency claimed here, simply
was not a foreseeable result of the barge breaking free from
Defendant’s facility. In order to foresee such a result, Lafarge
would have had to have anticipated that the negligent mooring of
the barge would probably cause the barge to allide and breach
the Canal, contributing to the flooding of the Parish, that such
flooding would be substantial, that Parish residents would be
forced to flee for an extended period of time, and the Parish
would consequently be deprived of substantial tax revenue. The
Court

concludes

attenuated
Defendant
required
request

and
to

for
for

that

damages

distant

state

a

proximate
leave

to

from

alleged
the

plausible
cause,
re-plead

by

alleged
claim

and

of

thus,

would

be

the

Parish

negligence

are

too

of

the

foreseeability,
granting
futile.

as

Plaintiff’s
See

In

re

Deepwater Horizon, 500 Fed. App’x 355 (5th Cir. 2012)(affirming
district court’s grant of judgment on pleadings where plaintiff
failed to plausibly allege foreseeability of injuries from oil
spill).
13

III.

CONCLUSION
Accordingly, and for the reasons enumerated above,
IT IS ORDERED that Defendant’s Motion for Judgment on the

Pleadings

is

GRANTED

and

Plaintiff’s

claim

for

“impairment

and/or loss of tax base(s) and consequent loss of tax revenue”
is hereby DISMISSED with prejudice.

New Orleans, Louisiana, this 14th day of September, 2015.

____________________________
UNITED STATES DISTRICT JUDGE

14