D & S Marine Transportation, L.L.C. v. S & K Marine, L.L.C. et al
Filing
91
ORDER OVERRULING 84 MOTION for APPEAL OF MAGISTRATE JUDGE DECISION to District Court. Pla's motion for leave to file 2nd amended complaint is DENIED. Signed by Judge Mary Ann Vial Lemmon on 10/7/15. (cbn)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
D & S MARINE TRANSPORTATION,
L.L.C.
CIVIL ACTION
VERSUS
NO: 14-2048
S & K MARINE, L.L.C., BEN
STRAFUSS, AND BJS BLESSEY,
L.L.C.
SECTION: "S" (4)
OPINION
Defendants, S & K Marine, L.L.C. and Ben Strafuss, appeal the United States Magistrate
Judge’s August 19, 2015, Order (Doc. #82) granting in part plaintiff's Motion to for Leave of Court
to File Second Supplemental and Amending Complaint (Doc. #72), in which the United States
Magistrate Judge permitted plaintiff, D & S Marine, L.L.C., to bring claims against Ben Strafuss
arising under the Louisiana Unfair Trade Practices Act ("LUTPA"), Louisiana Revised Statutes §
51:1401, et seq.1 See Doc. #84. For the reasons explained below, the ruling of the United States
Magistrate Judge is OVERRULED.
BACKGROUND
This matter is before the court on defendants' appeal of the United States Magistrate Judge's
August 19, 2015, Order granting in part plaintiff's Motion to for Leave of Court to File Second
Supplemental and Amending Complaint (Doc. #72), in which the United States Magistrate Judge
permitted D & S Marine to bring LUTPA claims against Ben Strafuss. Defendants argue that this
ruling was clearly erroneous because such claims are perempted.
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Additionally, the United States Magistrate Judge denied in part plaintiff's Motion to for Leave of
Court to File Second Supplemental and Amending Complaint as to adding Amis as a defendant.
D & S Marine is a marine transportation company that operates a fleet of tow boats that
move barges. On August 11, 2014, D & S Marine filed this action against defendants in the ThirtySecond Judicial District Court, Parish of Terrebonne, State of Louisiana alleging that defendants
breached a bareboat charter agreement 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. 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.
Applying Louisiana law, this court denied the motion to dismiss as to D & S Marine's breach
of contract, bad faith breach of contract, and detrimental reliance claims against S & K Marine, and
its tortious interference with contractual relations claim against Strafuss.2 The court found that the
parties contemplated that the final bareboat charter agreement would be in writing and signed by the
parties, which did not occur. However, the court also found that by alleging that 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[,]" D & S Marine alleged that it began performance
under the bareboat charter agreement by spending money to make modifications to the vessel while
it was under construction. Thus, the court found that this, along with the other pertinent allegations
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The court granted the motion as to D & S Marine's breach of contract, bad faith breach of contract,
and detrimental reliance claims against Strafuss and BJS Blessey, L.L.C.
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in the complaint, was sufficient for D & S Marine to state claims for breach of contract and bad faith
breach of contract against S & K Marine, and for tortious interference with contractual relations
against Strafuss. Further, the court found that D & S Marine sufficiently stated a claim for
detrimental reliance against S & K Marine, because it alleged that it relied on S & K Marine's word
and conduct regarding the formation of the charter party, and alleged that S & K Marine changed
its position to D & S Marine's detriment by spending money to modify the vessel under construction
and by entering into a sub-charter agreement with one of its customers.
Thereafter, S & K Marine and Strafuss filed a motion for summary judgment arguing that
all claims against them must be dismissed because D & S Marine did not spend any money
modifying the vessel. The court denied the motion finding that there were disputed issue of material
fact that precluded summary judgment.
On May 29, 2015, D & S Marine filed a Motion to for Leave of Court to File Second
Supplemental and Amending Complaint seeking to bring LUTPA claims against Strafuss. D & S
Marine contended that an email to Strafuss from his business partner, Calvin Klotz, dated February
17, 2014, which was produced during discovery, provided a basis for such claims. Defendants
argued that the amendment was futile because the claims were perempted under LUTPA's one-year
peremption period.
The United States Magistrate Judge granted D & S Marine's motion as to adding LUTPA
claims against Strafuss. While she recognized that the LUTPA claims were technically perempted,
the United States Magistrate Judge ruled that under Rule 15(c) of the Federal Rules of Civil
Procedure, the LUTPA claims against Strafuss relate back to the filing of the original petition
because they arise out of the same conduct, transaction or occurrence as the allegations therein.
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Defendants filed an appeal of that ruling arguing that the finding is contrary to law.
Defendants argued that a peremptive period is a substantive right under Louisiana state law, and the
Rules Enabling Act, 28 U.S.C. § 2072, prohibits using Rule 15(c) to enlarge a substantive right. D
& S Marine argues that the United States Magistrate Judge's Order was correct because she applied
the federal procedural rules, as is required in a diversity case.
ANALYSIS
A.
Standard of Review
“The Federal Magistrates Act grants district courts authority to assign magistrates certain
described functions as well as such additional duties as are not inconsistent with the Constitution
and laws of the United States.” Peretz v. United States, 111 S.Ct. 2661, 2663 (1991) (internal
quotation and footnote citation omitted). Pursuant to 28 U.S.C. § 636(b)(1)(A), a district judge may
designate a magistrate judge to hear any pretrial matter pending before the court, with a few
exceptions. The district judge reviews the magistrate judge's orders on pretrial matters assigned
under subparagraph (A) on a clearly erroneous or contrary to law standard. 28 U.S.C. §
636(b)(1)(A). Motions for leave to amend the complaint are ordinarily considered nondispositive
in nature and subject to the clearly erroneous or contrary to law standard. See PYCA Indus., Inc. v.
Harrison Cnty. Waste Water Mgmt. Dist., 81 F.3d 1412, 1421 (5th Cir. 1996).
B.
Peremption and Rule 15(c)
A federal court exercising diversity subject-matter jurisdiction over an action applies "state
substantive law and federal procedural law." Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins.
Co., 130 S.Ct. 1431, 1448 (2010) (quoting Hanna v. Plumer, 85 S.Ct. 1136, 1141 (1965)). Rule
15(c)(1)(B) of the Federal Rules of Civil Procedure provides that "[a]n amendment to a pleading
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relates back to the date of the original pleading when . . . the amendment asserts a claim or defense
that arose out of the conduct, transaction, or occurrence set out - - or attempted to be set out- - in the
original pleading." The United States Court of Appeals for the Fifth Circuit has explained that this
rule
is a procedural provision to allow a party to amend an operative
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. The
rationale of the rule is that, once litigation involving a particular
transaction has been instituted, the parties should not be protected by
a statute of limitations from later asserted claims that arose out of the
same conduct set forth in the original pleadings. . . . This so-called
“relation back” doctrine does not extend the limitations period, but
merely recognizes that the purposes of the statute are accomplished
by the filing of the initial pleading.
Kansa Reinsurance Co., Ltd. v. Congressional Mortg. Corp. of Tex., 20 F.3d 1362, 1366-67 (5th Cir.
1994) (internal citations and quotations omitted). An amendment may be allowed after the statutory
period has run even if it completely changes the legal theory of plaintiff's claim because "[t]he
federal rules shift the emphasis from state theories of law as to cause of action to the specified
conduct of the defendant upon which plaintiff relies to enforce his claim." Longbottom v. Swaby,
397 F.2d 45, 48 (5th Cir. 1968) (citations omitted). "The purpose of the rule is accomplished if the
initial complaint gives the defendant fair notice that litigation is arising out of a specific factual
situation." Id.
La. Rev. Stat. § 1409(E) provides that an action under LUTPA "shall be prescribed by one
year running from the time of the transaction or act which gave rise to the right of action." This is
a peremptive period. Glod v. Baker, 899 S.2d 642, 646 (La. Ct. App. 2005); see also Naghi v.
Brenner, 17 So.3d 919, 923 (La. 2009) (recognizing that when a statute creates a right of action and
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states the time in which it must be exercised, the time is a peremptive period). Louisiana Civil Code
article 3458 defines peremption as "a period of time fixed by law for the existence of a right[,]" and
states that "[u]nless timely exercised, the right is extinguished upon the expiration of the peremptive
period." The Supreme Court of Louisiana has stated that the difference between prescription and
peremption is that: "Statutes of prescription simply bar the remedy. Statutes of peremption destroy
the cause of action itself. That is to say, after the time expires the cause of action no longer exists,
it is lost." Naghi, 17 So.3d at 923 (quoting Guillory v. Avoyelles Ry. Co., 28 So. 899, 901 (La.
1900)). The Supreme Court of Louisiana has also explained that:
Peremption differs from prescription in several respects. Although
prescription prevents the enforcement of a right by legal action, it
does not terminate the natural obligation (La. C.C. art. 1762(1));
peremption, however extinguishes or destroys the right (La. C.C. art.
3458). Public policy requires that rights to which peremptive periods
attach are to be extinguished after passage of a specified period.
Accordingly, nothing may interfere with the running of a peremptive
period.
Id. (quoting Hebert v. Doctors Mem'l Hosp., 486 So.2d 717, 723 (La. 1986)). Citing these
principles, the Supreme Court of Louisiana held that perempted claims cannot relate back to the
filing of the original petition under Louisiana Code of Civil Procedure article 1153. Id. at 925-26.
Because the court must apply federal procedural rules, it is irrelevant whether a perempted
claim would relate back under Louisiana Code of Civil Procedure article 1153. See Shady Grove
Orthopedic, 130 S.Ct. at 1448. However, the Rules Enabling Act provides that the Federal Rules
of Civil Procedure may not "abridge, enlarge or modify any substantive right." 28 U.S.C. § 2072(b).
The Supreme Court of Louisiana has clearly stated that peremption is not merely a procedural bar
to litigation, rather it destroys the existence of a substantive right. See Naghi, 17 So.3d at 923-26.
Permitting relation back of a perempted claim under Rule 15(c) would expand a substantive right,
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which is prohibited by the Rules Enabling Act. See Miguel v. Country Finding Corp., 309 F.3d
1161, 1165 (9th Cir. 2002) (finding that the Rules Enabling Act prohibited the application of Rule
15(c) to a claim that was barred by a statute of repose because it would expand a substantive right).
Therefore, D & S Marine's perempted LUTPA claims against Strafuss cannot relate back to the
filing of the original petition, making the filing of the claim futile. The United States Magistrate
Judge's August 19, 2015, Order allowing the filing of those claims is OVERRULED.
CONCLUSION
The United States Magistrate Judge’s August 19, 2015, Order granting in part plaintiff's
Motion to for Leave of Court to File Second Supplemental and Amending Complaint (Doc. #82) as
to adding LUTPA claims against Ben Strafuss is OVERRULED, and plaintiffs' Motion to for Leave
of Court to File Second Supplemental and Amending Complaint (Doc. #82) is DENIED.
New Orleans, Louisiana, this _____ day of October, 2015.
7th
____________________________________
MARY ANN VIAL LEMMON
UNITED STATES DISTRICT JUDGE
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