D & S Marine Transportation, L.L.C. v. S & K Marine, L.L.C. et al
Filing
35
ORDER granting in part and denying in part 18 Motion to Dismiss for Failure to State a Claim. Signed by Judge Mary Ann Vial Lemmon on 1/29/15. (cbn)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
D & S MARINE TRANSPORTATION,
LLC
CIVIL ACTION
VERSUS
NO: 14-2048
S & K MARINE, LLC, ET AL.
SECTION: "S" (4)
ORDER AND REASONS
IT IS HEREBY ORDERED that Defendants' Motion to Dismiss (Doc. #18) is GRANTED
as to plaintiff's breach of contract, bad faith breach of contract, and detrimental reliance claims
against Ben Strafuss and BJS Blessey, L.L.C., and such claims are DISMISSED WITHOUT
PREJUDICE.
IT IS FURTHER ORDERED that Defendants' Motion to Dismiss (Doc. #18) is DENIED
as to plaintiff's breach of contract, bad faith breach of contract, and detrimental reliance claims
against S & K Marine, and plaintiff's tortious interference with contractual relations claim agaisnt
Ben Strafuss.
BACKGROUND
This matter is before the court on a motion to dismiss filed by defendants, S & K Marine,
L.L.C., Ben Strafuss, and BJS Blessey, L.L.C. Defendants argue that plaintiff, D & S Marine
Transportation, LLC, has failed to state a claim against them upon which relief can be granted.
D & S Marine is a marine transportation company that operates a fleet of tow boats that
move barges. It alleges that in 2013, before the formation of S & K Marine,1 it engaged in
discussions with Calvin Klotz, regarding the construction of two vessels that were to be owned by
S & K Marine, and operated by D & S Marine. D & S Marine alleges that:
1
S & K Marine was registered with the Louisiana Secretary of State on December 11, 2013.
[t]he parties entered into a bareboat charter agreement establishing a
fixture by agreeing on essential terms of the charter such as the rate,
initial term of five (5) years with option to extend for another five (5)
year term, vessel maintenance, and option to purchase after the initial
term, all while working out remaining details to finalize agreement.
The parties continued to "refine minor details of their agreement through February 2014." D & S
Marine also alleges that, with defendants' consent, it "undertook a significant amount of work with
the shipyard to modify the vessel under construction to meet the configurations required and used
in [its] fleet."
On November 4, 2013, Pat McDaniel, an employee of D & S Marine, outlined the "the
agreed upon terms of the charter" in an electronic mail message to the company's attorney. These
terms included the five year term and five year renewal option of the charter party, the purchase
options, the $850.00 daily charter hire, and that D & S Marine would supply all fuel, lubes and
related taxes, would crew and maintain the vessel, and carry vessel insurance.
On January 31, 2014, McDaniel sent an electronic mail message to Klotz stating that they
"should finalize the contract next week as [McDaniel] will send [Klotz] a copy to review."
McDaniel also indicated that he did not think that there were any other changes other than those that
were previously discussed. Klotz replied that they would meet the following week to finalize the
contract. Also on January 31, 2014, D & S Marine entered into a time charter agreement for the
same vessel under construction, with one of its customers.
On February 10, 2014, McDaniel sent an electronic mail message to Klotz stating that the
attorney "is sending over a final version [of the charter party] today, as we will get it to you shortly
for review. I think we are done??"
2
D & S Marine alleges that between February 10, 2014, and February 14, 2014, Strafuss met
with Walter Blessey, Chairman and CEO of Blessey Marine Services, Inc., and thereafter informed
Klotz that "he would be chartering the vessels to Blessey Marine Services, Inc." D & S Marine
claims that it "became aware the charter agreement was breached when workers at [the shipyard]
informed [it] that major changes had been ordered on the vessel."
D & S Marine filed this action against defendants in the Thirty-Second Judicial District
Court, Parish of Terrebonne, State of Louisiana alleging that defendants breached a charter party
entered into between D & S Marine and S & K Marine. D & S Marine also alleges that defendants
breached that contract in bad faith, that Strafuss committed an intentional interference with
contractual relations, and that defendants are liable for detrimental reliance. Defendants removed
the action to the United States District Court for the Eastern District of Louisiana, alleging diversity
subject matter jurisdiction under 28 U.S.C. § 1332. Defendants filed a motion to dismiss under Rule
12(b)(6) of the Federal Rules of Civil Procedure arguing that D & S Marine failed to state any viable
claims under either Louisiana law or the general maritime law.
ANALYSIS
A.
Rule 12(b)(6) of the Federal Rules of Civil Procedure
Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a motion to dismiss a
complaint for failure to state a claim upon which relief can be granted. To survive a Rule 12(b)(6)
motion to dismiss, enough facts to state a claim for relief that is plausible on its face must be
pleaded.2 In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atl.
2
D & S Marine asserts that Louisiana's fact-pleading standard, rather than the notice-pleading
standard of Rule 8 of the Federal Rules of Civil Procedure applies to the determination of the sufficiency of
the complaint because this action was originally filed in Louisiana state court and later removed to federal
court. Rule 81(c)(2) of the Federal Rules of Civil Procedures provides, in pertinent part, that "[a]fter removal,
3
v. Twombly, 127 S.Ct. 1955, 1964-65 & 1973 n. 14 (2007)). A claim is plausible on its face when
the plaintiff pleads facts from which the court can “draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). “Factual
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).” Bell Atl., 127 S.Ct. at
1965. The court “must accept all well-pleaded facts as true and view them in the light most
favorable to the non-moving party.” In re S. Scrap Material Co., LLC, 541 F.3d 584, 587 (5th Cir.
2008). However, the court need not accept legal conclusions couched as factual allegations as true.
Iqbal, 129 S.Ct. at 1949-50.
In considering a motion to dismiss for failure to state a claim, a district court may consider
only the contents of the pleading and the attachments thereto. Collins v. Morgan Stanley Dean
Witter, 224 F.3d 496, 498 (5th Cir. 2000) (citing FED. R. CIV. P. 12(b)(6)). However, “[d]ocuments
that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are
referred to in the plaintiff’s complaint and are central to her claim.” Id. at 498-99 (internal citations
omitted).
B.
Choice of Law
repleading is unnecessary unless the court orders it." After removal, a plaintiff is not required to replead to
conform the complaint to Rule 8. See White v. State Farm Mut. Auto Ins. Co., 479 Fed. Appx. 556, 561 (5th
Cir. 2012). However, Rule 81(c)(1) provides that the Federal Rules of Civil Procedure "apply to a civil action
after it is removed from state court." Therefore, it is appropriate to apply Rules 8 and 12(b)(6) to this case.
4
Defendants argue that D & S Marine's claims arise under Louisiana law, not the general
maritime law. They contend that the alleged charter party was not a maritime contract because the
vessel was not completed, and thus the general maritime law does not apply to D & S Marine's
claims.
Whether a contract is a "maritime contract" depends on its nature and character, rather than
the place of its execution or performance." Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313, 316
(5th Cir. 1991) (citing N. Pac. S.S. Co. v. Hall Bros. Marine Ry. & Shipbuilding Co., 39 S.Ct. 221,
223 (1919); Kossic v. United Fruit Co., 81 S.Ct. 886 (1961)). “A contract relating to a ship in its
use as such, or to commerce or navigation on navigable waters, or to transportation by sea or to
maritime employment is subject to maritime law.” Id. (quoting E. Jhirad, A. Sann, B. Chase & M.
Chynsky, Benedict on Admiralty, § 182 (1988)). The "[d]etermination of the nature of a contract
depends in part on historical treatment in the jurisprudence and in part on a fact-specific inquiry.”
Id.
In Cain v. Transocean Offshore USA, Inc., 518 F.3d 295, 301 (5th Cir. 2008), the United
States Court of Appeals for the Fifth Circuit stated that the court has "previously noted the historical
tradition that vessels under construction give rise to neither a maritime contract nor a maritime tort."
(quotation and citation omitted). This precedent is consistent "with the historical perspective that
vessels under construction are treated differently from completed vessels[,]" because "[o]ther courts
have similarly concluded that an incomplete structure that has not been put into navigation as an
instrument of commerce is not a vessel." Id. (citations omitted).
It is undisputed that the vessel to which the alleged charter party applied was under
construction at all pertinent times. Actions concerning that uncompleted vessel cannot give rise to
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either a maritime contract or maritime tort. Id. Therefore, Louisiana law applies to D & S Marine's
claims against defendants.
C.
D & S Marine's Breach of Contract and Bad Faith Breach of Contract Claims
D & S Marine alleges that S & K Marine breached a charter party that it had with S & K
Marine, and that it did so in bad faith. S & K Marine argues that D & S Marine cannot sustain such
claims under Louisiana law as there was no contract to breach because the parties contemplated that
the contract would be executed in a specific form, which never occurred.3 S & K Marine argues that
D & S Marine's allegations and the draft charter party demonstrate that the parties intended the
contract to be reduced to writing. D & S Marine argues that S & K Marine tacitly accepted the
agreed upon terms of the contract without the writing by allowing D & S Marine to make
expenditures to modify the vessel to conform to its fleet. D & S Marine characterizes this as
performance under the contract.
Under Louisiana law, "[a] contract is an agreement by two or more parties whereby
obligations are created, modified, or extinguished." LA. CIV. CODE art. 1906. The formation of a
valid contract requires: (1) capacity to contract; (2) mutual consent; (3) a certain object; and, (4) a
lawful purpose. Id. at arts. 1918, 1927, 1966, and 1971.
3
Strafuss and BJS Blessey argue that they cannot be held liable for breaching a contract to which
they were not parties. They point out that D & S Marine alleges that it had a contract with S & K Marine,
and D & S Marine reaffirms in its opposition memorandum that the alleged contract was with S & K Marine,
not Strafuss and BJS Blessey. A person cannot be held liable for breaching a contract to which it is not a
party. B-G & G Investors VI, L.L.C. v. Thibaut HG Corp., 985 So.2d 837, 842 (La. Ct. App. 2008). Thus,
Strafuss and BJS Blessy cannot be held liable for breach of contract or bad faith breach of contract in
connection with a contract to which they were not parties. To the extent D & S Marine alleges Strafuss and
BSJ Blessy are liable for breach of contract or bad faith breach of contract with respect to the alleged charter
party, such claims are DISMISSED WITHOUT PREJUDICE.
6
In this case, D & S Marine, and S & K Marine, after its registration with the Louisiana
Secretary of State, had the capacity to contract. See id. at arts. 24 and 1918 (All persons, natural and
juridical, have the capacity to contract); Ogea v. Merritt, 130 So.3d 888, 894 (La. 2013) (A limited
liability company is a juridical person to which the law attributes personality). It is also undisputed
that the contract at issue concerned a certain object and a lawful purpose, i.e. a charter of a vessel
that was under construction. See LA. CIV. CODE art. 1971 (Parties are free to contract for any object
that is lawful, possible and determined or determinable). The parties dispute whether there was
mutual consent.
Consent of the parties to a contract is established through offer and acceptance. Id. at art.
1927. “Unless the law prescribes a certain formality for the intended contract, offer and acceptance
may be made orally, in writing, or by action or inaction that under the circumstances is clearly
indicative of consent.” Id. Further, “[u]nless otherwise specified in the offer, there need not be
conformity between the manner in which the offer is made and the manner in which the acceptance
is made.” Id.
However, "[w]hen, in the absence of a legal requirement, the parties have
contemplated a certain form, it is presumed that they do not intend to be bound until the contract is
executed in that form." Id. at art. 1947. In Breaux Bros. Const. Co. v. Assoc. Contractors, 226 La.
720 (La. 1954), the Supreme Court of Louisiana observed that:
As far back as the year 1814 this court held that, where it has been
agreed between the parties that an agreement shall be reduced to
writing, the contract is not complete until it is written and signed by
all the parties. Villere v. Brognier, 3 Mart., O.S., 326.
In Fredericks v. Fasnacht, 30 La.Ann. 117, this court said:
‘* * * It is elementary in our law, that where the
negotiations contemplate and provide that there shall
be a contract in writing, neither party is bound until
7
the writing is perfected and signed. The distinction is
manifest between those cases in which there is a
complete verbal contract, which the law does not
require to be reduced to writing, and a subsequent
agreement that it shall be reduced to writing, and
those in which, as in this case, it is a part of the
bargain that the contract shall be reduced to writing.
In the first class of cases the original verbal contract
is in no manner impaired by the failure to carry out
the subsequent agreement to put it in writing. In the
second class of cases, the final consent is suspended;
the contract is inchoate, incomplete, and it can not be
enforced until it is signed by all the parties. Villéré v.
Brognier, 3 Mart., O.S., 326, 349; Des Boulets v.
Gravier, 1 Mart., N.S., 420, 421, 422; Bloeker v.
Tillman, 4 La. 77, 80.’
This principle of law has been consistently adhered to by this court
ever since. See Evans v. Dudley Lumber Co., Inc., 164 La. 472, 114
So. 101, and authorities cited therein.
(emphasis in original). The presumption created by Article 1947 can be rebutted by demonstrating
that the parties tacitly accepted the terms agreed upon terms by beginning performance. See Myers
v. Burger King Corp., 618 So.2d 1123 (La. Ct. App. 1993).
D & S Marine's complaint contains examples that demonstrate that it and S & K Marine
contemplated that the charter party would be in writing. Specifically, these examples are: the
November 4, 2013, electronic mail message from McDaniel to the company's attorney regarding the
terms of the contract; McDaniel's January 31, 2014, electronic mail message to Klotz stating that
McDaniel would forward a copy of the contract and they would meet next week to finalize it; and,
McDaniel's February 10, 2014, electronic mail message to Klotz stating that he was "sending over
a final version [of the charter party] today, as we will get it to you shortly for review. I think we are
done??" Further, an unexecuted written draft of the charter party contains an integration clause
which states:
8
This Agreement constitutes the entire agreement between the parties
concerning this Agreement and supersedes all prior agreements,
written or verbal understandings or agreements, and this Agreement
is the sole agreement between the parties as to the charter of the
Vessel. To be effective, any amendments hereto must be in writing
and executed by both parties.
Although it appears that D & S Marine and S & K Marine contemplated that the final charter
party would be reduced to writing, D & S Marine has also alleged that S & K Marine tacitly
accepted the terms of the parties' oral agreement as to the major terms of the contract by permitting
D & S Marine to spend money making modifications to the vessel as it was under construction.
Because tacit acceptance can rebut Article 1947's presumption as to a required form, D & S Marine
has stated a claim for breach of contract and bad faith breach of contract against S & K Marine.
Therefore, S & K Marine's motion to dismiss is DENIED as to D & S Marine's breach of contract
and bad faith breach of contract claims against it.
D.
Tortious Interference with Contractual Relations
Strafuss argues that D & S Marine cannot sustain a claim against him for intentional
interference with a contract because there was no contract, and he simply accepted a better business
deal.4
In 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228, 234 (La. 1989), the Supreme Court of
Louisiana recognized a limited cause of action for tortious interference with contractual relations
that pertains "only a corporate officer's duty to refrain from intentional and unjustified interference
with the contractual relation between his employer and a third person." The Court explained that:
4
S & K Marine and BJS Blessey joined in the motion to dismiss this cause of action. D & S
Marine's allegations pertaining to tortious interference with contractual relations are asserted in paragraphs
34 through 40 of the complaint. These allegations are directed at Strafuss, and do not state such a claim
against S & K marine or BJS Blessey.
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an officer is privileged to induce the corporation to violate a
contractual relation, or make its performance more burdensome,
provided that the officer does not exceed the scope of his authority or
knowingly commit acts that are adverse to the interests of his
corporation. Where officers knowingly and intentionally act against
the best interest of the corporation or outside the scope of their
authority, they can be held liable by the party whose contract right
has been damaged.
Id. at 231. The elements of the cause of action are:
(1) the existence of a contract or a legally protected interest between
the plaintiff and the corporation; (2) the corporate officer's
knowledge of the contract; (3) the officer's intentional inducement or
causation of the corporation to breach the contract or his intentional
rendition of its performance impossible or more burdensome; (4)
absence of justification on the part of the officer; (5) causation of
damages to the plaintiff by the breach of contract or difficulty of its
performance brought about by the officer.
Id. at 234.
D & S Marine alleges that Strafuss, a member of S & K Marine, intentionally interfered with
its contract with S & K Marine by causing S & K Marine to breach the contract when he decided
to charter the vessel to another party. As explained herein supra, D & S Marine has stated a claim
for breach of an alleged contract. There has been no finding that there was no contract. D & S
Marine's allegations sufficiently state a claim for tortious interference with contractual relations
against Strafuss. Thus, the motion to dismiss is DENIED as to D & S Marine's tortious interference
with contractual relations claims against Strafuss.
E.
Detrimental Reliance
Defendants argue that D & S Marine cannot sustain a cause of action for detrimental reliance
because it was unreasonable for D & S Marine to rely on a contract that was not executed in its
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contemplated form. D & S Marine argues that it has asserted a claim for detrimental reliance against
defendants because it reasonably relied on an oral agreement.
The doctrine of detrimental reliance is provided in Louisiana Civil Code article 1967, which
states:
Cause is the reason why a party obligates himself. A party may be
obligated by a promise when he knew or should have known that the
promise would induce the other party to rely on it to his detriment
and the other party was reasonable in so relying. Recovery may be
limited to the expenses incurred or the damages suffered as a result
of the promisee's reliance on the promise. Reliance on a gratuitous
promise made without required formalities is not reasonable.
There are three elements required for the application of detrimental reliance: (1) a
representation by conduct or word; (2) justifiable reliance thereon; and (3) a change of position to
one's detriment because of the reliance. Morris v. Friedman, 663 So.2d 19, 25 (La. 1995). “[T]he
basis of detrimental reliance is ‘the idea that a person should not harm another person by making
promises that he will not keep.'" Suire v. Lafayette City-Parish Consol. Gov't, 907 So.2d 37, 59 (La.
2005). “Thus, the focus of analysis of a detrimental reliance claim is ... whether a representation was
made in such a manner that the promisor should have expected the promisee to rely upon it, and
whether the promisee so relies to his detriment." Id.
In its complaint, D & S Marine alleges that it relied on S & K Marine's word and conduct
regarding the formation of the charter party, and believed that there was a valid contract because the
essential terms were agreed upon. D & S Marine also alleges that it changed its position to its
detriment by spending money to modify the vessel under construction and entering into a sub-charter
agreement with one of its customers. Because this court has not held there was no contract due to
a deficiency in its form, D & S Marine has sufficiently stated a cause of action for detrimental
11
reliance against S & K Marine. However, D & S Marine has not stated a cause of action for
detrimental reliance against Strafuss or BJS Blessey because it does not allege that it relied on any
representations made by them. Indeed, throughout the complaint D & S Marine alleges that it
negotiated with Klotz, who was acting on S & K Marine's behalf. Therefore, the motion to dismiss
is GRANTED as to D & S Marine's detrimental reliance claims against Strafuss and BJS Blessey
and DENIED as to D & S Marine's detrimental reliance claim against S & K Marine.
CONCLUSION
IT IS HEREBY ORDERED that Defendants' Motion to Dismiss (Doc. #18) is
GRANTED as to plaintiff's breach of contract, bad faith breach of contract, and detrimental reliance
claims against Ben Strafuss and BJS Blessey, L.L.C., and such claims are DISMISSED WITHOUT
PREJUDICE.
IT IS FURTHER ORDERED that Defendants' Motion to Dismiss (Doc. #18) is DENIED
as to plaintiff's breach of contract, bad faith breach of contract, and detrimental reliance claims
against S & K Marine, and plaintiff's tortious interference with contractual relations claim agaisnt
Ben Strafuss.
29th
New Orleans, Louisiana, this _____ day of January, 2015.
____________________________________
MARY ANN VIAL LEMMON
12
UNITED STATES DISTRICT JUDGE
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