South Louisiana Ethanol, L.L.C. v. Messer, et al

Filing 154

ORDER AND REASONS denying without prejudice to reurge 120 Motion for Summary Judgment. Signed by Judge Ivan L.R. Lemelle. (Reference: all cases)(ijg, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SOUTH LOUISIANA ETHANOL, LLC

CIVIL ACTION

VERSUS

NO. 11-2715
c/w 12-379
PERTAINS TO ALL CASES

ERIC JACOB MESSER, ET AL.

SECTION “B”(4)

ORDER AND REASONS
Before the Court are Defendant Southern Scrap Materials, Co.,
L.L.C.'s ("Southern Scrap") Motion for Summary Judgment against the
claims of Plaintiff South Louisiana Ethanol, L.L.C. (“SLE”) and
Intervenor Whitney Bank (“Whitney”), SLE and Whitney's Opposition
to the Motion, and Southern Scrap's subsequent Reply in support of
its Motion.

(Rec. Docs. No. 120, 123, & 139).

Accordingly, and

for the reasons articulated below,
IT

IS

ORDERED

that

Southern

Scrap's

Motion

for

Summary

Judgment (Rec. Doc. No. 120) is DENIED without prejudice to reurge.
Procedural History and Facts of the Case:
SLE entered into an engineering, procurement, and construction
contract with ENGlobal U.S., Inc. (“ENGlobal”) in January 2007, for
the retrofitting of an ethanol facility in Plaquemines Parish,
within the Eastern District Louisiana.

(Rec. Doc. No. 1-1 at 3).

ENGlobal hired Precision Combustion Technology, L.L.C. ("PCT") as
a subcontractor, and SLE sent several pieces of equipment to PCT's
yard in Gonzales, Louisiana for repair.

Id.

SLE alleges that

while its equipment was in the possession of PCT, PCT wrongfully
sold some of the equipment, heat exchangers belonging to SLE, to
Southern Scrap. Id. SLE now seeks recovery against Southern Scrap
for

alleged

conversion

exchangers.1

and

Id. at 11-12.

fraudulent

transfer

of

the

heat

Whitney intervened in the matter

asserting a first-ranking security interest in SLE's property,
having provided financing to SLE for its engineering work on the
plant PCT was contracted to work on.

(Rec. Doc. No. 120-2 at 3).

In its instant motion for summary judgment, Southern Scrap
argues that SLE and Whitney's claims involve seven heat exchangers
that were 304 grade stainless steel.
Southern

Scrap

asserts

that

because

(Rec. Doc. No. 120 at 1).
the

heat

exchangers

it

purchased from PCT were 316 grade stainless steel, and not 304
grade, SLE and Whitney have no cause of action against Southern
Scrap.

Id. at 1-2.

Law & Analysis
A. Summary Judgment Standard
Summary judgment is proper if the pleadings, depositions,
interrogatory

answers,

and

admissions,

together

with

any

affidavits, show that there is no genuine issue as to any material

1

SLE initiated the action in state court, but the case was
subsequently removed to federal court under 28 U.S.C. §§ 1452(a) and 1334(b),
as it was related to the bankruptcy proceeding of SLE, already pending in
federal court. (Rec. Doc. No. 1 at 2). SLE also seeks recovery against the
principals of PCT (Steven Zane Glaze, Cynthia Ann Glaze, and Eric Jacob
Messer). (Rec. Doc. No. 1-1). SLE also filed claims against PCT's insurers,
Fireman's Fund and C&I and Chartis; the Court granted the insurers' motions
for summary judgment on those claims. (Rec. Docs. No. 100 & 101).

2

fact and that the moving party is entitled to judgment as a matter
of law. Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett,
477 U.S. 317, 327 (1986). A genuine issue exists if the evidence
would

allow

a

reasonable

jury

to

return

a

verdict

for

the

nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,
(1986). Although the Court must consider the evidence with all
reasonable inferences in the light most favorable to the nonmoving
party, the nonmovant must produce specific facts to demonstrate
that a genuine issue exists for trial. Webb v. Cardiothoracic
Surgery Assocs. of N. Texas, 139 F.3d 532, 536 (5th Cir. 1998).
Because “only those disputes over facts that might affect the
outcome

of

the

lawsuit

under

governing

substantive

law

will

preclude summary judgment,” questions that are unnecessary to the
resolution of a particular issue “will not be counted.” Phillips
Oil Co. v. OKC Corp., 812 F.2d 265, 272 (5th Cir. 1987).
As to issues for which the non-moving party has the burden of
proof

at

trial,

the

moving

party

may

satisfy

its

burden

by

demonstrating the absence of evidence supporting the non-moving
party’s claim. Celotex v. Catrett, 477 U.S. 317, 323 (1986). Once
the movant makes this showing, the burden shifts to the nonmovant
to set forth specific facts showing that there is a genuine issue
for trial. Rivera v. Houston Indep. Sch. Dist., 349 F.3d 244, 247
(5th Cir. 2003).

The nonmovant must go beyond the pleadings and

use affidavits, depositions, interrogatory responses, admissions,

3

or other evidence to establish a genuine issue. Id. Accordingly,
conclusory rebuttals of the pleadings are insufficient to avoid
summary judgment. Travelers Ins. Co. v. Liljeberg Enter., Inc., 7
F.3d 1203, 1207 (5th Cir. 1993).
B.

SLE and Whitney's claims of conversion and fraudulent transfer
"Under Louisiana law, 'a conversion consists of an act in

derogation of the plaintiff's possessory rights, and any wrongful
exercise or assumption of authority over another's goods, depriving
him of the possession, permanently or for an indefinite time, is a
conversion.'"

In re Hamlin, 411 B.R. 310, 313 (W.D. La. 2009),

quoting Quealy v. Paine, Webber, Jackson & Curtis, Inc., 475 So.2d
756, 760 (La. 1985), emphasis added.

"Under § 548(a)(2)(A) and

(B)(I) of the Bankruptcy Code (11 U.S.C.), a transaction is
fraudulent if it is 1) a transfer of the debtor's interest in the
property, 2) made within one year of the filing of the bankruptcy
petition, 3) an exchange for which the debtor received less than a
reasonably equivalent value, and 4) made while the debtor was
insolvent.

The

Trustee

may

'avoid'

such

a

transaction

recovering the property so transferred or its value."

by

In re

McConnell, 934 F.2d 662, 664 (5th Cir. 1991), emphasis added.
Therefore, proper identification of the heat exchangers at issue is
material to SLE and Whitney's claims of: 1) conversion under
Louisiana law and 2) fraudulent transfer under Section 548.
Southern Scrap relies on the expert report of Phillip Peck and

4

Whitney's discovery responses to assert that the heat exchangers at
issue in SLE's and Whitney's

conversion and fraudulent transfer

claims are made of 304 grade stainless steel. (Rec. Doc. No. 120-2
at

4-5).

deposition

Southern
and

Scrap

discovery

then

points

responses

to

to

its

contend

own

corporate

that

the

heat

exchangers it purchased from PCT were 316 grade stainless steel,
and

therefore

cannot

Whitney's claims.

be

the

Id. at 6-8.

exchangers

at

issue

in

SLE

and

SLE and Whitney contend that the

discrepancy in grade of stainless steel, 304 or 316, may be
attributable to a misprint, as stated by Southern Scrap's own
representative, Mr. Jason Passantino, in a deposition from another
action.2

(Rec. Doc. No. 123 at 4-6).

SLE and Whitney further

assert that the expert, Peck, indicated that equipment such as the
exchangers at issue are often comprised of both 304 and 316 grade
stainless steel alloys.

Id. at 4.

SLE and Whitney also refer to

photographs of heat exchangers on PCT's property which taken during
taken during
Peck's appraisal of the property in 2008, as well as Peck's
assessment that "there were not any other heat exchangers besides
the ones owned by SLE" on PCT's property at that time.
No. 123 at 4).

(Rec. Doc.

Therefore, SLE and Whitney present evidence which

2

The Court rejects Southern Scrap's argument that the excerpts from
Mr. Passantino's deposition are inadmissible because they are from an earlier
action. (Rec. Doc. No. 139 at 5-7). The Court finds that the deposition is
admissible pursuant to the Federal Rules of Civil Procedure, which provides
for the use of depositions from prior actions if it involves "the same subject
matter between the same parties," or "as allowed by the Federal Rules of
Evidence." Fed. R. Civ. P. 32(a)(8); see also Fed. R. Evid. 801, 807.

5

creates a genuine issue of material fact as to whether the heat
exchangers sold to Southern Scrap were the same exchangers owned by
SLE.3
the

Consideration of the weight of this evidence is precisely
type

of

task

reserved

for

the

factfinder

at

trial.

Accordingly, the evidence is sufficient at this stage for SLE and
Whitney to survive Southern Scrap's motion for summary judgment on
the conversion and fraudulent transfer claims, and
IT

IS

ORDERED

that

Southern

Scrap's

Motion

for

Summary

Judgment is DENIED without prejudice to reurge.
New Orleans, Louisiana, this 6th day of June, 2013.

____________________________
UNITED STATES DISTRICT JUDGE

3

The Court notes, however, that the statement that the discrepancy in
stainless steel grade "might" be attributable to a misprint, as well as Peck's
expert statement, just barely rises above the "mere scintilla of evidence"
standard. See Chaney v. Dreyfus Service Corp., 595 F.3d 219, 229 (5th Cir.
2010) ("We are not required to accept the nonmovant's ...unsubstantiated
assertions which are ... supported by a mere scintilla of evidence.").

6