D & S Marine Transportation, L.L.C. v. S & K Marine, L.L.C. et al

Filing 82

ORDERED that 72 Motion for Leave to File Second Supplemental and Amending Complaint is GRANTED IN PART and DENIED IN PART. It is GRANTED as to allowing D & S Marine to allege a claim under LUTPA against Ben Strafuss. It is DENIED as to adding Amis as a defendant. D & S Marine shall file an amended complaint in accordance with this order by August 26, 2015. Signed by Magistrate Judge Karen Wells Roby. (cml

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
D & S MARINE TRANSPORTATION, L.L.C.

CIVIL ACTION

VERSUS

NO:

S & K MARINE, L.L.C., ET AL.

SECTION: “S” (4)

14-2048

ORDER
Before the Court is a Motion for Leave of Court to File Second Supplemental and
Amending Complaint (R. Doc. 72), filed by the Plaintiff, D & S Marine Transportation LLC
(“D & S Marine”). D & S Marine seeks leave to (1) add Amis as a new defendant to allege
claims of tortious interference with contract and violation of LUTPA; and (2) add a new cause of
action against Defendant Ben Strafuss for violation of LUTPA. The motion is opposed. R. Doc.
73. The motion was heard for oral argument on Wednesday, July 1, 2015.
I.

Background
This action arises out of the breach of a long term charter agreement for an inland towing

vessel. Under the agreement, D & S Marine agreed to operate two vessels owned by Defendant,
S & K Marine LLC (“S & K Marine”), for a five year period with the option to extend for
another five years and the option to purchase after the initial five year term. See R. Doc. 1-2, at
3-4. D & S Marine alleges that the negotiations began June 2013 and the parties continued to
refine minor details of their agreement through February 2014. Id. at 4. At some unspecified
point in 2014, D & S Marine alleges that it learned S & K Marine, through its member Ben
Strafuss, breached the agreement and entered into an agreement for vessel charter with Amis. See
R. Doc. 7-1, at 2.
D & S Marine initiated this action on August 11, 2014 in the 32nd Judicial District Court
for the Parish of Terrebonne, Louisiana against S & K Marine, BJS Blessey Marine LLC (“BJS
Blessey”) and Ben Strafuss (collectively “Defendants”). Id. The Defendants removed the case to

federal court on the grounds of diversity jurisdiction and federal question jurisdiction, as the
claims fell under general maritime law. See R. Doc. 1. Defendants allege in their notice of
removal that the plaintiff is a Louisiana limited liability company and that its sole member is
domiciled in Louisiana. Defendants further allege that S & K Marine and BJS Blessey are solely
owned by defendant Ben Strafuss, who is domiciled in Tennessee. Id. at 4-8. And as of
December 10, 2014, the Defendants have also acknowledged that Ben Strafuss is a member of
Amis, LLC. See R. Doc. 23-1, at 5.
In the original complaint, D & S Marine alleged breach of contract, bad faith breach of
contract, intentional interference with contractual relations, and detrimental reliance. On January
30, 2015, the Court granted the Defendants’ motion to dismiss, leaving D & S Marine with the
following claims against the following defendants: (1) breach of contract, bad faith breach of
contract, and detrimental reliance against S & K Marine, and (2) tortious interference with
contractual relations against Ben Strafuss. See R. Doc. 35.
In the instant motion, D & S Marine seeks leave of court to amend its complaint to (1)
add Amis as a new defendant to allege claims of tortious interference with contract and violation
of LUTPA; and (2) add a new cause of action against defendant Ben Strafuss for violation of
LUTPA. See R. Doc. 72-1, at 2. D & S Marine argues that it seeks to amend its complaint in
light of “recent judicial admissions by the defendants and the discovery responses by Ben
Strafuss.” Id. D & S Marine essentially contends that the Defendants have conceded that Strafuss
is a member of Amis and that discovery has demonstrated that Strafuss used Amis to usurp a
business opportunity for himself. Id. at 3.
II.

Standard of Review
Federal Rules of Civil Procedure (“Rule”) 15(a), which governs the amendment of

pleadings, provides that leave to amend pleadings “shall be freely given when justice so
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requires.” This, and other federal rules, “reject the approach that pleading is a game of skill in
which one misstep by counsel may be decisive to the outcome and accept the principle that the
purpose of pleading is to facilitate a proper decision on the merits.” Conley v. Gibson, 355 U.S.
41, 48 (1957).
Thus, Rule 15(a) evinces a liberal and lenient amendment policy and a motion to amend
should not be denied absent a substantial reason to do so. See Jacobsen v. Osborne, 133 F.3d
315, 318 (5th Cir. 1998). Furthermore, “this ‘policy’ is strongest when the motion challenged is
the first motion to amend.” Thompson v. New York Life Ins. Co., 644 F.2d 439, 444 (5th Cir.
1981). Permission may be granted even though the original pleading is defective in its statement
of a claim for relief or defense. Id.
Leave to amend is by no means automatic, but is within the sound discretion of the trial
court. Addington v. Farmer's Elevator Mut. Ins. Co., 650 F.2d 663, 666 (5th Cir. 1981). In
exercising its discretion, the trial court must determine that there is a "substantial reason" for the
delay. Mayeaux v. La. Health Serv. and Indem. Co., 376 F.3d 420, 425 (5th Cir. 2004). The
Court may consider such factors as (1) undue delay, bad faith, or dilatory motive on the part of
the movant; (2) repeated failure to cure deficiencies by amendments previously allowed; (3)
undue prejudice to the opposing party by virtue of allowance of the amendment; and (4) futility
of the amendment. Gregory v. Mitchell, 634 F.2d 199, 203 (5th Cir. 1981).
III.

Analysis
D & S Marine filed the subject motion within the amendment deadline, so the liberal

standards of Rule 15(a) apply in determining whether leave should be permitted. In considering
the four factors, the parties have narrowed the issue to whether the amendment would be futile.
Nonetheless, the Court finds it prudent to also consider the timeliness of D & S Marine’s
proposed amendment.
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A.

Undue Delay, Bad Faith, or Dilatory Motive on the Part of the Movant

D & S Marine contends that it learned from emails produced on April 7, 2015, that
Strafuss, a member of Amis, usurped the business opportunity from D & S Marine through
Amis. See R. Doc. 72-1, at 3. D & S Marine asserts that at the time it filed this action, it did not
and could not have known of Amis’ involvement in the events that form the basis of the
underlying lawsuit. Id. at 4. D & S Marine contends that Strafuss is not listed as a member of
Amis on the Louisiana Secretary of State database, so it had no way of knowing his membership
in the limited liability company at the time the suit was filed. D & S Marine also avers that it
filed this subject motion within the amendment deadline of June 1, 2015, set forth by the
Scheduling Order (R. Doc. 61).
The Defendants contend that it is difficult to reconcile D & S Marine’s contention that it
recently learned of Amis’ connection to the vessel because it attempted to add Amis as a
defendant more than seven months ago. See R. Doc. 73, at 2. Defendants argue that they
acknowledged that Strafuss was a member of Amis when it filed its motion for protective order
on December 10, 2014 and that D & S Marine had constructive knowledge of the fact that Amis
was the owner of the vessel dating back to April 2014.
The Court notes that delay alone does not justify denial of a motion to amend. Long v.
Wilson, 393 F.3d 390, 400 (3d Cir. 2004). Rather, denial of a motion under Rule 15(a) is
appropriate where the delay is “undue” in that it prejudices the nonmoving party or places an
unfair burden on the Court. Mayeaux, 376 F.3d at 427 (citing Dussouy v. Gulf coast Inv. Corp.,
660 F.2d 594, 597 (5th Cir. 1981)); Adams v. Gould, Inc., 739 F.2d 858, 868 (3d Cir. 1984), cert
denied, 469 U.S. 1122, 105 S. Ct. 8069888 (1985). Although Rule 15(a) does not impose a time
limit “for permissive amendment, ‘at some point, time delay on the part of a plaintiff can be
procedurally fatal.’” Smith v. EMC Corp., 393 F.3d 590, 595 (5th Cir. 2004) (quoting Whitaker
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v. City of Houston, 963 F.2d 831, 836 (5th Cir. 1992)). In such a situation, the plaintiff bears the
burden of showing that delay to be “‘due to oversight, inadvertence, or excusable neglect.’” Id.
(quoting Mitchell, 634 F.2d at 203).
In the instant motion, D & S Marine seeks to add a new defendant and a new cause of
action against an existing defendant, Strafuss. Given the parties’ arguments, the Court finds it
prudent to separately consider the timeliness of the Motion in respect to Amis and Strafuss. As
for Amis, D & S Marine was on notice of Strafuss’s ownership interest in Amis as far back as
December 10, 2014, but it did not seek leave to amend its complaint until May 29, 2015, five
months and nineteen days later. While D & S Marine contends that the basis for its amendment
was formed by the discovery it received on April 7, 2015, the Court’s review of the discovery
proves that the discovery does not justify the delay of over five months.
The discovery D & S Marine relies upon is an email sent by Strafuss’s business partner,
Calvin Klotz, to Strafuss regarding their alleged agreement with D & S Marine and an email sent
between Strafuss and Joe Gregory about the projected completion date of the vessels. The Klotz
email was sent to Strafuss on February 17, 2014, and discussed Klotz’s concerns about S & K
Marine not honoring the agreement with D & S Marine. The Gregory email was sent in
December 2013 and discussed, among other things, the accelerated depreciation for the vessels
due to their completion date. However, Amis was not formed until March 2014, a month after
the Klotz email was sent and three months after the Gregory email was sent. The emails did not
address the yet to be formed Amis nor did they address, at minimum, Strafuss’s intent to form
Amis to usurp the business opportunity.
Furthermore, upon looking at the claims D & S Marine seeks to assert against Amis, the
Court concludes that the emails did not provide additional information to form the basis of a
claim under LUTPA or for tortious interference with contract. Under LUTPA, there is a two-part
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test for bringing a claim: “1) the person must suffer an ascertainable loss; and 2) the loss must
result from another's use of unfair methods of competition and unfair or deceptive acts or
practices.” Hardy v. Easterling, 113 So. 3d 1178, 1187 (La. App. 2 Cir. 2011) (citation omitted).
For tortious interference with contract, there are five elements: (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. Favrot v. Favrot, 68 So. 3d 1099, 1111 (La. App. 4 Cir. 2011), writ denied, 62 So. 3d
127 (La. 2011).
Considering these elements and the emails from December 2013 and February 2014, it is
clear that the emails did not provide a basis for D & S Marine to bring these claims against Amis.
If anything, the emails may assist with D & S Marine’s existing claim against Strafuss for
tortious interference with contract because the emails only implicate the conduct of Strafuss and
not the conduct of the yet to be formed Amis. Therefore, the Court finds that the discovery
produced on April 7, 2015, did not provide notice of a possible claim against Amis. Rather, D &
S Marine’s notice of a possible claim against Amis was formed in December 2014 when it
learned Strafuss was a member of Amis. Accordingly, the Court finds that D & S Marine was
delayed in seeking to add Amis as a defendant.
Nonetheless, in considering D & S Marine’s proposed new cause of action against
Strafuss under LUTPA, the Court finds that the emails produced on April 7, 2015 included
additional information to provide notice to D & S Marine of a possible claim. Therefore, the
Court finds that D & S Marine was not delayed in adding its LUTPA claim against Strafuss.
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B.

Futility of the Amendment

D & S Marine argue that its claim against Strafuss under LUTPA is not barred by
peremption because they relate back to the date the original complaint was filed. See R. Doc. 782, at 4-5. D & S Marine contends that relation back applies in this matter under Rule 15(c)
because the Defendants were on notice of the claim, which is critical to the relation back
analysis. Id. at 5. D & S Marine contends that in the State of Louisiana it is uncertain whether
LUTPA claims are prescriptive or preemptive.1 Id. at 7. Nonetheless, D & S Marine contends
that LUTPA claims can relate back to the original complaint, despite whether they are
peremptive or prescriptive. Id.
The Defendants contend that LUTPA claims must be brought within one year from the
time of the transaction or act which gave rise to the asserted claim and that the one year period is
peremptive, not prescriptive. See R. Doc. 73, at 8. Defendants argue that D & S Marine alleges
that the breach of the alleged bareboat charter agreement occurred in February 2014, thus the one
year tolling period ended in February 2015 and the proposed LUTPA claim against is perempted
on its face. Id.
Futility is an important consideration when determining whether to grant leave to amend.
A court may deny a motion for leave to amend where “the proposed amendment would be futile
because it could not survive a motion to dismiss.” Rio Grande Royalty Co. v. Energy Transfer
Partners, L.P., 620 F.3d 465, 468 (5th Cir. 2010) (emphasis added). Where viability of a claim is
at least facially possible, futility does not provide grounds for granting an amendment. See Jaso
v. The Coca Cola Co., 435 F. App'x 346, 353–54 & n. 6 (5th Cir. 2011).

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“Peremption differs from prescriptive in two respects: (1) the expiration of the peremptive time period
destroys the cause of action itself; and (2) nothing may interfere with the running of a peremptive time period.”
Naghi v. Brener, 17 So. 3d 919, 926 (La. 2009).
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Here, the alleged contract breach occurred in February 2014 and under LUTPA, private
actions “shall be prescribed by one year running from the time of the transaction or act which
gave rise to this right of action.” La. Rev. Stat. Ann. 51:1409. In interpreting the prescription
period, state and federal courts in Louisiana have treated the one year period as a peremptive
period. See Atel Mar. Investors, LP v. Sea Mar Mgmt., L.L.C., No. CIV.A. 08-1700, 2012 WL
2994337, at *9 (E.D. La. July 20, 2012) (finding the plaintiff’s LUTPA claim must fail as a
matter of law because it was filed after the one-year

peremptive period); Reese v. ICF

Emergency Mgmt. Servs., Inc., L.L.C., 684 F. Supp. 2d 793, 801 (M.D. La. 2010) (stating that
LUTPA claims are subject to a peremptive period); Dominion Exploration & Prod., Inc. v.
Waters, 2007-0386 (La. App. 4 Cir. 11/14/07), 972 So. 2d 350, 356 (La. Ct. App. 2007) (“The
one-year limitation period in LUTPA is preemptive, rather than prescriptive.”).
The principle difference between a peremptive and prescriptive filing period is that the
expiration of the peremptive time period destroys the cause of action and nothing may interfere
with the running of a peremptive time period. Naghi v. Brener, 17 So. 3d 919, 926 (La. 2009).
When considering an amended complaint, some lower state courts before 2009 held that the
relation back theory applied to peremptive limitations periods. See Houston Indus., Inc. v. Fitch,
32,654 (La. App. 2 Cir. 2/1/00), 752 So. 2d 974, 976 writ denied, 2000-0643 (La. 4/20/00), 760
So. 2d 351 (“[T]he relation back theory is applicable to claims governed by a peremptive rather
than a prescriptive period.”); Thibaut v. Thibaut, 607 So. 2d 587, 608 (La. Ct. App. 1992) (“[A]
cause of action under [LUTPA] La.R.S. 51:1409 [can] be maintained under a relation back
theory.”).
However, in 2009, the Louisiana Supreme Court in Naghi found “there can be no
escaping the fact that relation back interferes with the operation of the prescriptive or peremptive
time period in that it avoids its operation.” 17 So. 3d at 925. The Louisiana Supreme Court
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further noted that “the relation back theory assumes that there is a legally viable claim to which
the pleading can relate back” and that “[p]eremption, however, destroys the cause of action
itself.” Id. Thus, “‘relation back of an amended or supplemental pleading . . . is not allowed to
avoid the running of a peremptive period’ as peremption ‘destroys the cause of action itself.’”
Keys v. State, Dep't of Soc. Servs., 2012-216 (La. App. 3 Cir. 10/3/12) (quoting Naghi, 17 So.3d
at 925). Therefore, under Louisiana procedural law, LUTPA claims cannot relate back to the
original pleading.
Nonetheless, under the Erie doctrine, a federal court sitting in diversity does not apply
state procedural law, but federal procedural law. See Erie R. Co. v. Tompkins, 304 U.S. 64, 92,
58 S. Ct. 817, 828 (1938). Accordingly, “the Federal Rules of Civil Procedure, rather than the
Louisiana rules, govern whether plaintiff’s claims relate back.” Stanley v. Trinchard, No. CIV.A.
02-1235, 2010 WL 3168113, at *4-5 (E.D. La. Aug. 9, 2010) (addressing party’s contention that
“Louisiana courts do not allow claims barred by peremption periods to ‘relate back’ to a timely
filed original complaint”); see also Schewe v. USAA Cas. Ins. Co., No. CIV.A. 06-881, 2007 WL
2174588, at *8 (E.D. La. July 27, 2007) (asserting that Rule 15(c) governs after the running of
the peremptive period).
Under the Federal Rules of Civil Procedure, the relation back theory will apply to the
LUTPA claims if Rule 15(c) is satisfied. Rule 15(c) provides for three mechanisms for allowing
a subsequent amendment to relate back to the original filing date: (1) when the state law allows
relation back and that law affords a more forgiving principle of relation back than the one
provided under the Rules; (2) when the new claim or defense arose out of the conduct,
transaction, or occurrence set out in the original pleading; or (3) when the amendment changes
the defendant or the name of the defendant and it arises out of the conduct, transaction, or

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occurrence set out in the original pleading. See Fed. R. Civ. P. 15(c)(1)(A)-(C); see also Fed. R.
Civ. P. 15 (Advisory Committee Note).
Here, the first and third mechanism under Rule 15(c) are not applicable. As previously
discussed, the Louisiana relation back rule for LUTPA claims is not more forgiving than the
federal rules because under peremption the LUTPA claim extinguished after one year and
relation back does not apply. Additionally, the third mechanism is not applicable because D & S
Marine seeks to add a LUTPA claim against an existing defendant. Therefore, the second
mechanism under Rule 15(c) is the only applicable option in this case.
Under the second option, a party is permitted under Rule 15(c) to amend a pleading
‘“despite an applicable statute of limitations in situations where the parties to litigation have been
sufficiently put on notice of facts and claims which may give rise to future, related claims.’”
Stanley, 2010 WL 3168113, at *4 (quoting Kansa Reinsurance Co. v. Cong. Mortgage Corp. of
Texas, 20 F.3d 1362, 1367 (5th Cir. 1994)). Furthermore, “it is not relevant whether a Louisiana
court would permit plaintiff’s . . . claims to relate back to plaintiff's original pleading.” Id. In
making the determination of whether the claim relates back, “[t]he Court must consider whether
plaintiff’s . . . claim ‘arose out of the conduct, transaction, or occurrence set forth or attempted to
be set forth in the original pleading.’” Id. at *5 (quoting Fed. R. Civ. P. 15(c)(1)(A)).
In this case, the facts alleged in the proposed amended complaint arise out of the same
facts alleged in the original complaint. Namely, D & S Marine alleges that Strafuss knew of the
contract with D & S Marine and usurped the opportunity through Amis to use the vessels in
direct competition with D & S Marine. The whole process allegedly executed by Strafuss to
violate LUTPA, is the same process alleged in D & S Marine’s claim against Strafuss for
intentional interference with contractual relations. Thus, the claim arises out of the same conduct,
transaction, or occurrence of the allegations in the original complaint and the LUTPA claim
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relates back to the filing of the original complaint. As such, the Court finds that the LUTPA
claim against Strafuss is not futile.
IV.

Conclusion
IT IS ORDERED that Plaintiff, D & S Marine’s Motion for Leave of Court to File

Second Supplemental and Amending Complaint (R. Doc. 72) is GRANTED in part and
DENIED in part. It is GRANTED as to allowing D & S Marine to allege a claim under LUTPA
against Ben Strafuss. It is DENIED as to adding Amis as a defendant. D & S Marine shall file an
amended complaint in accordance with this order by August 26, 2015.
New Orleans, Louisiana, this 19th day of August 2015.

KAREN WELLS ROBY
UNITED STATES MAGISTRATE JUDGE

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