CHS, Inc. v. Plaquemines Holdings, LLC

Filing 21

ORDER and REASONS granting 5 Motion to Dismiss for Failure to State a Claim. Signed by Judge Helen G. Berrigan on 8/19/2015. (kac)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

PLAQUEMINES HOLDINGS, LLC

CIVIL ACTION

v.

NO. 11-3149

CHS, INC.

SECTION “C”

And
CHS, Inc.

CIVIL ACTION

v.

NO. 15-1198

PLAQUEMINES HOLDINGS, LLC, ET AL

SECTION “C”

ORDER AND REASONS

Before this Court is Plaquemines Holdings, LLC’s 28 U.S.C. §2202 Motion to Enforce
Declaratory Judgment by Permanent Injunction and CHS Inc.’s Motion to Strike Plaintiff’s 28
U.S.C. §2202 Request for Injunctive Relief. Rec. Docs. 155, 208. The parties oppose each
other’s motions, and have filed numerous supplemental memoranda laying out their positions.
Rec. Docs. 173, 176, 187, 190, 193, 196, 220, 224, 226. In addition, CHS has initiated a new
action centering around the same dispute over PH’s servitude rights, and PH has filed a motion
to dismiss the newly filed action. Civ. A. 15-1198, Rec. Doc. 5. Having reviewed the record, the
law, and the arguments of the parties, the Court will GRANT IN PART and DENY IN PART the
§2202 Motion to Enforce Declaratory Judgment, DENY the Motion to Strike, and GRANT the
Motion to Dismiss.
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I.

Factual and Procedural Background
As has been discussed in detail in the Court’s Amended Opinion in this matter,

Plaquemines Holdings, LLC (“PH”) and CHS, Inc. (“CHS”) are in a dispute over a Servitude
Agreement. Rec. Doc. 150. CHS owns a tract of land along the Mississippi River and the
Servitude Agreement allows PH certain access and usage rights on CHS’s property. In 2011, PH
initiated this action seeking a declaration of rights under the Servitude Agreement to construct a
dock on the Mississippi River and to stop CHS’s construction of a large retaining pond that PH
alleged would prohibit use of its servitudes. Rec. Doc. 1. This action was subsequently removed
to this Court. Id.
The Court held a bench trial on this matter on April 15 and 16, 2013. Rec. Docs. 101,
102. On December 5, 2013, the Court issued an Amended Opinion finding, inter alia, that PH
has the right to build a dock located within the Grantee Dock Servitude Area, subject to certain
limitations; that PH is obligated to submit any dock construction plans and specifications to CHS
and obtain CHS’ approval before beginning construction on the dock; that CHS is obligated to
refrain from unreasonably withholding or delaying its approval; and that CHS is obligated to use
reasonable efforts to assist PH in acquiring relevant permits. Rec. Doc. 150 at 22-23. CHS timely
appealed the Amended Opinion to the United States Court of Appeal for the Fifth Circuit.
Plaquemines Holdings, L.L.C. v. CHS, Inc., Civ. A. No. 13-30957 (5th Cir. Jan. 16, 2015). PH
did not cross appeal. Id.
a. PH’s application to the Army Corps of Engineers
Following the Court’s ruling, PH reached out to CHS on December 26, 2013 to share
preliminary plans for the servitude dock. CHS did not respond. Rec. Doc. 155-5. On February
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18, 2014, PH wrote to CHS offering more detailed plans and specifications for the dock it
intended to build in the servitude area. Rec. Doc. 155-6. CHS wrote back, but responded to the
December 26 plans rather than the February 18 plans, and stated objections to the plan. Rec.
Doc. 155-7. On March 27, 2014, PH filed a permit application with the Army Corps of Engineers
(Army Corp) to build a dock in the servitude area. On September 15, 2014, CHS submitted
written objection to the Army Corps. Rec. Doc. 155-9. Notably, CHS objected that the dock
interfered with access to the barge cover station, even though the Amended Opinion ordered that
“CHS is obligated to refrain from raising objections during the permitting process that are based
solely on a proposed dock’s interference with the operation of its barge cover station.” Rec. Doc.
150 at 22. 1
b. PH’s §2202 Motion
On November 4, 2014, while CHS’s appeal was under submission with the Fifth Circuit,
PH filed the instant 28 U.S.C. §2202 Motion to Enforce Judgment by Permanent Injunction
seeking CHS’s present and future compliance with the Amended Opinion. Rec. Doc. 155-2 at 1.
In sum, PH sought to have the Court enter injunctions requiring the following:
1) CHS must promptly write to the Army Corps and withdraw all objections
made in its September 15, 2014 letter to the Corps objecting to PH’s dock
permit application;
2) CHS may not implicitly or explicitly, whether directly or indirectly,
communicate any objections to the Corps, or to any other permitting authority,
with regard to PH’s permitting and construction of the dock proposed in PH’s
permit application or in connection with any other future permit application
for a servitude dock based on the location set forth in PH’s February 18 letter
to CHS;

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CHS’s letter stated that PH’s proposed plans would interfere with the ability of a “tug and grain barge to safely
navigate and reach the landward side of the CHS ship dock.” Rec. Doc. 155-9 at 1. As PH points out, the “landward
side of the CHS ship dock” refers to CHS’s barge cover station as it is the sole structure into which CHS barges
enter. Rec. Doc. 155-2 at 6.

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3) CHS may not assert any objections to the Corps or to any other permitting
authority with regard to the use of the servitude dock by PH or any PH
Invitee, including Vertex Refining LA, LLC, in connection with a
reconditioned motor oil operation;
4) CHS may not take any action which prohibits or otherwise creates an
impediment to PH or PH’s Invitees’ construction of the servitude dock;
5) CHS may not take any action which prohibits or otherwise creates an
impediment to the use of the servitude dock by PH or any PH Invitee in
connection with a reconditioned motor oil operation.
Id. at 13.
c. The Fifth Circuit’s Ruling
On January 16, 2015, the Fifth Circuit issued its opinion on CHS’ appeal. The Fifth
Circuit affirmed the Court’s Amended Opinion with two minor exceptions. Rec. Doc. 201.
First, the Fifth Circuit held that the Court’s finding that “PH has the right to ship nonethanol products, including refined motor oil . . .” was too broad in allowing any non-ethanol
product. Id. at 9. The Fifth Circuit reformed that finding to the narrower “PH has the right to ship
refined motor oil . . . .” Id.
Second, the Fifth Circuit reversed and vacated the Court’s finding that CHS has an
obligation to assist PH in obtaining a permit to construct its dock. Id. at 13-14. The Fifth Circuit
held that CHS did not assume any obligation to assist PH in obtaining permits and that such an
obligation is not merely an incidental or accessorial duty. Id. at 14. However, the Fifth Circuit
affirmed the prohibition on CHS from lodging certain objections with the Army Corps. It stated,
“The Court affirms the district court’s judgment that CHS cannot object to the Corps of
Engineers or any other permitting process based solely on a proposed dock’s interference with
the operation of CHS’s barge cover station.” Id. at 16.
Aside from those two exceptions, the Fifth Circuit affirmed the rest of the Court’s
Amended Opinion. Id.
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d. CHS’s election of an alternate dock location
On January 22, 2015, CHS notified PH that it had designated an alternate location for
PH’s dock. Rec. Doc. 193-2. In doing so, CHS cited to the Court’s Amended Opinion and La.
Civ. Code art. 748. In the Amended Opinion, the Court held that, “CHS has the right to modify,
relax, or alter any of the requirements dictating the location for the exercise of the Servitude
Agreement.” Rec. Doc. 150 at 15. The Court stated that because CHS had demonstrated that the
original location of the servitude had become more burdensome to CHS and prevented CHS
from making useful improvements to its estate, that CHS had the right to provide PH with an
“equally convenient location” for PH’s dock. Id. at 15-16.
CHS has designated the northernmost 405-foot portion along the Mississippi River of the
parcel “D-2” as the new Grantee Dock Servitude Area. Rec. Doc. 193-2. CHS has “agreed to
compensate [PH] for any legitimate cost differential in construction access and pipeline
improvements for the dock at the new location.” Id. CHS has also clarified that it intends to
accommodate PH’s concern for relocation of the access and pipeline servitudes. Rec. Doc. 197-1
(“. . . CHS would cover the cost of additional pipeline work upon PH’s demonstrating the
expense, and after deducting savings in project costs.”).
PH contests CHS’ election of an alternate location. Rec. Doc. 194-2.

e. Subsequent developments
On March 12, 2015, the Court held a status conference and heard from both parties on
CHS’s proposal to designate an alternate location for PH’s dock. Rec. Doc. 202. At the
conference, the parties presented the Court with maps, descriptions of the D-2 tract’s location,
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and arguments regarding the D-2 tract’s convenience in relation to the original servitude area.
The parties agreed to meet with the Magistrate Judge to attempt a settlement of the matter before
litigating the issue further. Id. However, the parties were ultimately unable to reach a settlement.
Rec. Doc. 204.
On April 14, 2015, prior to the settlement conference with Magistrate Judge North, CHS
filed a new action seeking a declaratory judgment that the alternate location is equally
convenient, that PH is bound to accept the new location, and that PH may not exercise its right to
construct a dock in the original location. Rec. Doc. 1, Civ. A. 15-1198. PH has moved to dismiss
the complaint, arguing that it raises the same issues that are already before the Court in its
consideration of the Motion to Enforce Judgment and must be dismissed under the “first-to-file
rule.” Rec. Doc. 5-1, Civ. A. 15-1198. CHS opposes the motion. Rec. Doc. 11, Civ. A. 15-1198.
On June 3, 2015, the Army Corps granted PH the permit authorizing it to begin
construction of a dock in the original servitude area. Rec. Doc. 220-2.

II.

Law and Analysis

a. Mootness
CHS contends that the Motion to Enforce is largely mooted by the Army Corps’ granting
of a permit to construct a dock in the original servitude location. Rec. Doc. 226 at 1. PH agrees
in part, conceding that the motion is moot in several respects. Specifically, PH agrees that its
original request that the Court enjoin CHS to withdraw objections to the permit application is
now moot. Rec. Doc. 220 at 2. As the permit application process has concluded, the Court finds
that this issue is indeed moot.

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In addition, PH states that its request that the Court order CHS to refrain from
communicating objections to the Corps regarding the permit application and to refrain from
asserting objections to the Corps or any other permitting authority regarding the use of the dock
in connection with a motor oil refinery are partially moot. Id. The Court agrees that to the extent
that PH seeks an injunction preventing CHS from communicating new objections to the Corps in
connection with the permit application, this issue is now mooted by the granting of the permit.
The Court finds that the portions of the Motion to Enforce that request an injunction preventing
CHS from lodging further objections with other permitting authorities is not mooted.
Finally, PH contends that the following aspects of the motion are still at issue:
(1) that CHS be ordered not to “take any action which prohibits or otherwise creates an
improper impediment to PH or PH’s Invitees’ construction of the servitude dock; and
(2) that CHS be ordered not to “take any action which prohibits or otherwise creates an
improper pediment to the use of the servitude dock by PH or any PH Invitee in
connection with a reconditioned motor oil operation.”
Rec. Doc. 220 at 2. The Court agrees, as the granting of the Army Corps’ permit does not
foreclose other avenues for CHS to object to or impede the proposed construction of the
servitude dock in the original servitude area. Indeed, CHS’s attempt to designate an alternate
location for PH’s dock constitutes a potential impediment to construction of the dock, and
therefore falls under the purview of the §2202 motion. Thus, the Court finds that the §2202
motion is not mooted in its entirety, and will proceed to discuss whether PH is entitled to the
relief requested. Accordingly, the Motion to Strike is DENIED.

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b. Louisiana Civil Code Article 748
As discussed above, since the filing of the §2202 motion and following the Fifth Circuit’s
decision in this case, CHS has, for the first time, proposed an alternate location for the
construction of PH’s servitude dock. Rec. Doc. 193. CHS describes the new location (“D-2
location”) as a “portion of the Mississippi River along the northernmost 405-foot portion of the
parcel denominated ‘D-2.’” Rec. Doc. 193-2. In addition, CHS has agreed to compensate PH for
“any reasonable and demonstrated incremental cost to construct any necessary pipeline and
access improvements at the new location,” subject to an “offset for other savings on project
cost.” Id.
At the Court’s status conference on March 12, 2012, CHS represented that the D2
location would be less expensive for the running of PH’s operations, as it would allow direct
truck access and the dock could be built closer to shore, rather than in-line with CHS’s dock.
CHS also stated that the D-2 location would require less extensive piling because the dock would
be located in shallower water and could utilize existing mooring dolphins. However, CHS
conceded that the relocation would require the building of an entirely new road from PH’s
property to the D-2 location, the extending of pipeline, and the creation of several appurtenant
servitudes, the details of which would have to be worked out between the parties. Finally, CHS
stated that the construction of PH’s dock in the servitude area would be inconvenient for CHS
because it would require CHS to halt operations for three to four months, during which time its
employees would not be able to work.
PH objects that the D-2 location is not equally convenient because it is isolated from
PH’s property and any of the existing servitudes that PH possesses. Rec. Doc. 196 at 11. PH

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argues that the D-2 location would “require that PH’s lessee traverse and use property owned by
CHS in ways entirely unaccounted for by the Servitude Agreement,” requiring the parties to go
back to the drawing board to negotiate a new Servitude Agreement. Id. at 12. PH adds, not
without basis, that given the contentious relationship between the parties, such a negotiation
could likely end up back in court. Id. Most importantly, PH insists that it has expended
considerable time, energy, and financial resources pursuing permitting from the Army Corps.
Rec. Doc. 196 at 12. PH spent roughly a year and a half to design and gain permitting. Id. at 8.
This process would have to be restarted if CHS were allowed to designate the D-2 location for
the servitude, and would require an indeterminate amount of time likely stretching well beyond
an additional year to obtain a new permit.
Under Louisiana law and this Court’s Amended Opinion, CHS may designate a new
location for the servitude, provided that it is “equally convenient.” The issue of whether an
alternate location is “equally convenient” is an issue of fact. Id. at 177; Toups v. Abshire, 979 So.
2d 616, 618 (La. Ct. App. 3d Cir. 2008); Cathcart v. Magruder, 960 So. 2d 1032, 1041 (La. App.
1st Cir. 2007). Louisiana courts have upheld that “equally convenient” implies “a location which
is as suitable for the purpose as its predecessor.” Brown v. Bowlus, 399 So. 2d 545, 549 (La.
1981); Coleman v. Booker, 94 So. 3d 174, 177 (La. Ct. App. 2nd 2012).
Based on the evidence adduced at trial as well as the arguments of the parties and
additional exhibits provided in the subsequent memoranda and at the status conference, the Court
finds that the D-2 location is not equally convenient and cannot serve as an alternate location for
the servitude. As PH points out, the D-2 location is removed from PH’s property and from the
site planned for the reconditioned motor oil facility. Rec. Doc. 196-3. Just as importantly, the site
is isolated from the existing servitudes granted to PH under the Servitude Agreement. Rec. Doc.
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196-3. The Court previously found following a bench trial that the existing pipeline stretching
from CHS’s holding pond to the site of PH’s proposed dock was sufficient for transferring
product from PH’s facility to the barge dock. Rec. Doc. 150 at 18. The D-2 location has no such
pipeline or other means that would allow PH to transport product from the site of its facility.
Thus, the designation of the D-2 site would require the renegotiation of further servitudes and the
planning and designing of new structures over the servitude area in order to transport product
between the dock and the facility. Thus, the Court finds that the D-2 location is not as suitable as
the current servitude area for the delivery and shipment of motor oil, and cannot serve as an
alternate location for PH’s proposed dock.
Although CHS opines that an additional evidentiary hearing is needed to adjudicate the
issue of equal convenience, the Court disagrees. In supplemental briefing, CHS argues that
further discovery and a hearing is needed because the Court must consider testimony and
evidence from Vertex, PH’s tenant who will utilize the dock proposed by PH. Rec. Doc. 226 at
10. However, the Court finds that Vertex’s financial situation and ability to utilize the servitude
are irrelevant to the instant motion. The statute clearly sets forth that the issue of equal
convenience is in relation to the dominant estate—in this case, PH. PH has already shown that it
intends to use the existing servitude area for reconditioning and shipping motor oil and has
expended considerable resources in preparing it for this purpose. For the reasons discussed
above, the D-2 location is less convenient for PH’s intended purpose. Whether or not PH will
ultimately allow Vertex or another invitee to use the servitude does not affect the purpose of the
servitude itself. Thus, CHS may not designate the D-2 tract as an alternate location for the
servitude area.

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c. Unreasonable delay
In addition to the limitation of “equal convenience” set forth by Louisiana statute, this
Court’s Amended Opinion also required that once PH submitted its dock construction plans to
CHS in reasonable details, that CHS was “obligated to refrain from unreasonably withholding or
delaying its approval.” Rec. Doc. 150 at 21-22.
PH provided CHS with preliminary plans on December 26, 2013. Rec. Doc. 196 at 3. PH
submitted finalized plans to CHS on February 18, 2014. Id. CHS withheld approval of the plans
for another eleven months before presenting PH with the D-2 tract on January 22, 2015. Rec.
Doc. 193-2. CHS continues to withhold its approval of the dock construction plans. A delay of
eleven months is unreasonable in these circumstances, as PH was required to initiate the lengthy
process of seeking approval from the Army Corps. Also, nothing prevented CHS from
designating the alternate location at an earlier time. While CHS is certainly entitled to protect its
interests through an appeal to the Fifth Circuit, this does not require PH to keep its activities at a
standstill and sit on its own rights during that time. Although the Fifth Circuit ruled that CHS
was under no obligation to assist PH in its application for the Army Corps’ permit, it did not
disturb the portion of the Amended Opinion stating that CHS could not withhold its approval or
unreasonably delay PH’s construction. In asserting at this late stage the option of relocating the
servitude, CHS has acted in contravention to the Court’s order. Although La. Civ. Code Art. 748
does not place a deadline on the serviant estate’s right to designate an alternate, equally
convenient location, CHS is also bound by this Court’s Amended Opinion. Thus, the Court finds
that CHS’s insistence on relocating the servitude area violates the Amended Opinion and hereby
enjoins CHS from designating an alternate location for PH to exercise its rights under the
Servitude Agreement. However, the Court finds that PH’s request that the Court enjoin CHS

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from tak[ing] any action which prohibits or otherwise creates an impediment to the construction
and use of the servitude dock to otherwise be overly broad and indeterminate. Certainly, CHS is
bound to abide by the terms of the Amended Opinion, this order, and the Fifth Circuit’s
judgment on appeal. However, the Court will refrain from issuing overly broad injunctive relief.

d. Motion to Dismiss
CHS has filed a separate action based on the same underlying facts at issue in the §2202
Motion to Enforce Judgment (“the newly filed action”). In that complaint, CHS has named PH as
defendant and alleges the existence of the Servitude Agreement, much of the procedural history
of the instant action, and CHS’s offering of the D-2 tract as an alternate servitude area. Rec. Doc.
1, Civ. A. No. 15-1198. In an amended complaint, CHS added as additional defendants Vertex
Energy, Inc., and Vertex Refining LA, LLC (“Vertex”), which are PH’s lessees. PH has moved
to dismiss this action, arguing that under the “first-to-file rule,” the Court may refuse to hear a
case if the issues substantially overlap with those of an earlier filed case. Rec. Doc. 5-1 at 11.
The “first-to-file rule” provides that, “In all cases of concurrent jurisdiction, the court which first
has possession of the subject must decide it.” Crosley Corp. v. Hazeltine Corp., 122 F.2d 925,
929-30 (3rd Cir. 1941) (quoting Smith v. McIver, 22 U.S. 532, 535 (1824). The Third Circuit
reasoned that “[t]he party who first brings a controversy into a court of competent jurisdiction for
adjudication should, so far as our dual system permits, be free from the vexation of subsequent
litigation over the same subject matter.” Id. Thus, a district court may enjoin the parties before it
from filing separate lawsuits over the same subject matter. Id. The first-to-file rule is followed in
the Fifth Circuit. See, e.g. West Gulf Maritime Association v. ILA Deep Sea Local 24, 751 F.2d
721, 730 (5th Cir. 1985).

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CHS argues that the first-to-file rule applies only when related cases are pending before
two different federal courts, rather than before the same court as is the case here. Rec. Doc. 11 at
9. However, under Fifth Circuit case law, “the court in which an action is first filed is the
appropriate court to determine whether subsequently filed cases involving substantially similar
issues should proceed.” Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 606 (5th Cir.
1999). “The ‘first to file rule’ not only determines which court may decide the merits of
substantially similar issues, but also establishes which court may decide whether the second suit
filed must be dismissed, stayed or transferred and consolidated.” Id. (quoting Sutter Corp. v. P &
P Industries, Inc., 125 F.3d 914, 920 (5th Cir. 1997). Thus, it is within this Court’s discretion to
consider dismissal of CHS’s action.
The Court finds that dismissal of the newly filed suit is appropriate, as the facts and
disputes substantially overlap with those in the earlier filed suit. Although CHS contends that the
question of whether it may designate D-2 for the servitude dock is not a justiciable controversy
in the earlier action, CHS takes an overly narrow view of a district court’s power in ensuring that
the terms of declaratory or injunctive relief are followed. Rec. Doc. 11 at 10. The Fifth Circuit
has held, “It is well settled that the issuing court [of injunctive relief] has continuing power to
supervise and modify its injunctions in accordance with changed conditions.” Mann Mfg., Inc. v.
Hortex, Inc., 439 F.2d 403, 407-08 (5th Cir. 1971). The Fifth Circuit elaborated: “[A]n
injunction often requires continuing supervision by the issuing court and always a continuing
willingness to apply its powers and processes on behalf of the party who obtained that equitable
relief.” Id. Thus, the Court retains the ability to enforce the terms of its Amended Opinion,
including whether the designation of the D-2 track as an alternate location for PH’s dock
constitutes an unreasonable delay.

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Moreover, the Court finds that CHS seeks in the new action to litigate issues that the
Court has resolved in connection with the earlier action or that are currently before the Court in
the §2202 motion. Specifically, Count I of CHS’s Amended Complaint requests that the Court
declare that CHS is entitled to declaratory judgment that the designation of the D-2 tract is
equally convenient and that PH is bound to accept the new location. Rec. Doc. 10, Civ. A. No.
15-1198. As discussed above, the Court has found that the D-2 tract is not equally convenient.
CHS also seeks a declaration that neither PH nor Vertex may enter the Servitude Area
“for any purpose except in connection with a used motor oil refinery or other qualifying Plant on
Holdings’ property.” Id. at 13. The Court has already ruled on this issue in its Amended Opinion,
finding that PH has the right to permit its lessee to use and access any dock constructed pursuant
to the Servitude Agreement. Rec. Doc. 150 at 22-23. The Fifth Circuit has also rendered
judgment, finding that PH has the right to produce and ship refined motor oil on the dominant
estate, using a barge dock constructed in the Servitude Area. Rec. Doc. 201 at 9-10. The Fifth
Circuit has also stated that PH’s lessee is “entitled to access to CHS’s property (to the extent
authorized by the Servitude Agreement) for its legitimate needs in operating the Plant.” Id. at 11.
The Court finds that CHS’s claim in Count II merely rephrases what has already been considered
and ruled upon by both this Court and the Fifth Circuit.
Finally, Count III asks that the Court enjoin PH and Vertex from constructing a dock in
the servitude area. Rec. Doc. 10 at 13. Again, having determined that PH may construct just such
a dock, the Court finds that CHS’s claim for relief on this matter has been decided.
Thus, PH’s Motion to Dismiss is GRANTED.

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III.

Conclusion

Accordingly, IT IS ORDERED that:
a. CHS’s Motion to Strike (Rec. Doc. 167) is DENIED;
b. PH’s §2202 Motion to Enforce Judgment is GRANTED IN PART and DENIED IN
PART (Rec. Doc. 155). The Court finds that:
1. The D-2 location is not equally convenient under La. Civ. Code art. 748 and therefore
cannot serve as an alternate location for the Grantee Dock Servitude Area;
2. The designation of the D-2 tract as an alternate location constituted an unreasonable
delay in violation of the Court’s Amended Opinion;
3. CHS is permanently enjoined from designating an alternate location for the servitude
area;
c. PH’s Motion to Dismiss (Rec. Doc. 5, Civ. A. 15-1198) is GRANTED; and CHS’s
claims in Civ. A. 15-1198 are DISMISSED WITH PREJUDICE.

New Orleans, Louisiana this 19th day of August, 2015.

___________________________________
UNITED STATES DISTRICT JUDGE

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