Rozel Operating Company v. Crown Point Holdings, LLC, et al
Filing
62
ORDER & REASONS. It is ORDERED that Plaintiff's 39 Motion for Partial Summary Judgment against Crown Point for Release of Remaining Escrow Funds is GRANTED. Signed by Judge Carl Barbier. (gec)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ROZEL OPERATING COMPANY
CIVIL ACTION
VERSUS
NO: 16-1687
CROWN POINT HOLDINGS,
LLC, ET AL.
SECTION: “J”(1)
ORDER & REASONS
Before the Court is Rozel Operating Company’s (Rozel) Motion
for Partial Summary Judgment against Crown Point for Release of
Remaining Escrow Funds (R. Doc. 39), an opposition thereto filed
by Crown Point Holdings, LLC (Crown Point) (R. Doc. 42), a reply
filed by Rozel (R. Doc. 54), and a supplemental memorandum filed
by Crown Point (R. Doc. 52). Having considered the motion and legal
memoranda, the record, and the applicable law, the Court finds
that the motion should be GRANTED.
FACTS AND PROCEDURAL BACKGROUND
This action arises out of the alleged breach of a salvage
agreement. In 2007, Rozel chartered a barge known as the JMC 109
from Cashman Equipment Corporation (Cashman). (R. Doc. 1 at 3.)
The JMC 109 is comprised of two barge units, each made of steel
plated wing wall sections from a World War II Navy Dry Dock,
measuring one-hundred and five feet in length, forty-eight feet in
height, and eighteen feet in depth. (R. Doc. 1-5, at 1.) The JMC
109 was intentionally ballasted so that it sat on the seabed in
shallow water off the coast of Cameron, Louisiana. (R. Doc. 1 at
3.) Due to a crack in the hull, the JMC 109 was unable to be
recovered and has since remained on the seabed. Id. In 2008,
Cashman filed suit against Rozel seeking various damages for the
loss of the JMC 109. Id. On January 18, 2013, District Judge Mary
Ann Vial Lemmon issued a judgment and ordered Rozel to retrieve
the JMC 109 from the bottom of the Gulf of Mexico. (R. Doc. 394.)
To
comply
with
the
order,
Rozel
entered
into
a
written
agreement with Crown Point to salvage the JMC 109. Id. Under the
initial agreement, Crown Point was to have the first barge afloat
within five days of Crown Point commencing work at the site, and
the second barge was to be afloat within ten days from the salvage
of
the
first
barge.
Id.
Subject
to
force
majeure
exceptions
described within the agreement, the recovery of both barges was
not to exceed thirty days from Crown Point commencing work at the
site. Id. at 2. The total cost to complete salvage was eighthundred and fifty-thousand dollars ($850,000). Id. This $850,000
was comprised of a $150,000 “mobilization and demobilization”
payment upon execution of the agreement, and the remaining $700,000
was placed in an escrow account. Id. at 3. The initial agreement
provided that the salvage price of $700,000 was “due and payable
contingent upon, and only if, both wing walls are removed from
their current offshore location and brought to shore for scrap at
a suitable location as determined by [Crown Point]. . . . If for
2
any reason Completion is unable to be attained . . . Crown Point
will retain the $150,000 mobilization and demobilization cost and
shall not be entitled to any portion of the remaining $700,000
balance.” Id. Crown Point was to commence work by approximately
September 16, 2014. See id. 1
Crown Point did not commence operations until October 8, 2014.
(R. Doc. 39-9 at 2.) On December 18, 2014, after Crown Point
reported having difficulty retrieving the JMC 109, the parties
amended the initial agreement. (R. Doc. 39-10.) Specifically,
while the mobilization and demobilization fee remained the same,
the salvage price was increased to nine-hundred thousand dollars
($900,000).
Id.
However,
payment
of
the
$900,000
was
to
be
disbursed in two stages. First, four-hundred thousand (400,000)
was to be made payable contingent upon, and only if, one of the
two wing wall units was removed and brought to shore (First
Completion). Id. If for any reason neither of the two wing wall
units was unable to be removed, Crown Point would be entitled to
the $150,000 mobilization and demobilization payment, but would
not be entitled to any portion of the $900,000 in escrow. Id. In
the event that First Completion was attained, payment of the
1
Rozel’s memorandum states that Crown Point was to commence work by September
16, 2014. (R. Doc. 39-3 at 3.) However, the agreement provides that Crown Point
was “required to begin mobilization and be in route to the salvage location no
later than ten business days from the execution of the agreement.” (R. Doc. 15 at 3.) The agreement is dated September 2, 2014, thus making the date of
commencement, at the latest, September 13, 2014. Nevertheless, Crown Point did
not commence operations under October 8, 2014. (R. Doc. 39-9 at 2.)
3
remaining five-hundred thousand dollars ($500,000) in escrow was
payable and contingent upon, and only if, the second wing wall
unit was removed and brought to shore (Second Completion). Id. If
Second Completion could not be attained, Crown Point would be
entitled to retain the $150,000 mobilization and demobilization
cost and the $400,000 for First Completion, but Crown Point would
not be entitled to any of the remaining $500,000 in escrow. Id.
The amended agreement also provided:
All other terms and conditions of the [initial
agreement] which are not inconsistent with [the amended
agreement], including but not limited to the No Cure/No
Pay basis of work, shall remain in full force and effect.
. . . In the event [both wing wall units cannot be
retrieved in accordance with the agreement] by January
31, 2015, subject to force majeure delays described in
the [initial agreement] Rozel may, at Rozel’s sole
option and discretion, terminate [the initial agreement]
with respect to any unfinished work.
Id. Crown Point informed Rozel that it attained First Completion
on January 20, 2015. (R. Doc. 39-12.) On that same day, Rozel
authorized the payment of $400,000 from the escrow account to Crown
Point. (R. Doc. 39-14.) On January 30, 2015, Crown Point requested
an extension of the project deadline to attain Second Completion.
(R. Doc. 39-15.) Rozel agreed to extend the deadline from January
31, 2015 to February 20, 2015. Id. After making several unanswered
inquiries as to the status of the project, on July 22, 2015, Rozel
gave formal notice that the salvage agreement was terminated and
demanded that Crown Point release the $500,000 in escrow. (R. Doc.
4
39-19.) Crown Point refused to release the $500,000 remaining in
escrow.
On February 29, 2016, Rozel filed suit against Crown Point
Holding. (R. Doc. 1.) On August 23, 2016, Rozel filed a motion for
partial summary judgment. (R. Doc. 39.) In short, Rozel argues
that Crown Point has failed to attain Second Completion, and that
Rozel is therefore entitled to the $500,000 remaining in escrow.
See id. In response, Crown Point argues that two issues of material
fact exist which preclude summary judgment: 1) Whether any portion
of the JMC 109 remains at the salvage site; and 2) Whether bad
weather conditions at the salvage site created unsafe conditions
which prevented or delayed Crown Point from achieving Second
Completion. See (R. Doc. 41 at 3-4.) Rozel’s Motion for Partial
Summary Judgment against Crown Point for Release of Remaining
Escrow Funds is now before the Court on the briefs and without
oral argument.
PARTIES’ ARGUMENTS
1.
Plaintiff’s Arguments
First, Rozel argues that there is no genuine issue of material
fact that Crown Point failed to attain Second Completion. (R. Doc.
39-3 at 5.) Specifically, Rozel argues that the survey conducted
by Oceaneering International Company (Oceaneering International)
reveals that portions of the second barge still remain on the
seabed. Because Second Completion has not been attained, and
5
because
the
parties’
agreement
contained
a
no
cure/no
pay
provision, Rozel argues that Crown Point is not entitled to any of
the $500,000 remaining in escrow. Id. at 6. The no cure/no pay
provision
states
that
the
remaining
$500,000
is
“payable
contingent upon, and only if, the second and final wing wall unit
is removed” and “if for any reason second completion is unable to
be attained . . . [Crown Point] shall not be entitled to any
portion of the remaining $500,000 balance.” Id. at 7. Rozel argues
that this clause precludes Crown Point from receiving any of the
$500,000 remaining in escrow.
As to Crown Point’s argument that the weather at the salvage
site created unsafe working conditions, Rozel argues that this
assertion contradicts Crown Point’s initial argument that Second
Completion has occurred. (R. Doc. 39-5 at 3.) Rozel also argues
that it was entitled to terminate the agreement if Crown Point did
not complete the project by February 20, 2015, subject only to
force majeure events explicitly delineated within the parties’
agreement. Rozel argues that Crown Point’s generic statements that
“weather at the site for the majority of February through July
2015 created conditions unsafe” and “weather conditions at the
salvage site delayed the completion of the salvage project due to
unsafe working conditions” is insufficient evidence, alone, for
Crown Point to survive summary judgment.
6
2.
Defendant’s Arguments
Crown Point argues that the evidence presented by Rozel does
not conclusively prove that portions of the JMC 109 remain at the
salvage site. (R. Doc. 42 at 4.) Further, Crown Point argues that
“Rozel has provided no jurisprudential support for its assertion
that Crown Point shall receive no compensation on the ‘No-Cure NoPay’ terms of the contract.” Id. at 5. Because the JMC 109 was to
be salvaged for scrap, Crown Point argues that it is entitled to
a portion of the remaining $500,000 for its substantial completion
of the job. Id. Crown Point further argues that the affidavit of
Joseph Dardar, the manager of Crown Point, creates a genuine issue
of fact as to whether any portion of the JMC 109 remains on the
seabed.
Crown Point also argues that a genuine issue of material fact
exists as to whether bad weather conditions at the salvage site
created unsafe conditions, excusing its delayed performance. Id.
at 3. Crown Point argues that “[a]fter adequate discovery has been
conducted on this issue, Defendant will show at trial that weather
at the salvage site created dangerous conditions that delayed the
attainment of Second Completion.” Id. Crown Point argues that it
cannot
be
penalized
for
delays
arising
from
unsafe
working
conditions pursuant to the parties’ agreement. Id. Accordingly,
Crown Point argues that Rozel’s motion should be denied
7
LEGAL STANDARD
Summary judgment is appropriate when “the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R.
Civ. P. 56(c)); Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(5th Cir. 1994). When assessing whether a dispute as to any
material fact exists, a court considers “all of the evidence in
the record but refrains from making credibility determinations or
weighing
the
evidence.”
Delta
&
Pine
Land
Co.
v.
Nationwide
Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All
reasonable inferences are drawn in favor of the nonmoving party,
but
a
party
cannot
defeat
summary
judgment
with
conclusory
allegations or unsubstantiated assertions. Little, 37 F.3d at
1075. A court ultimately must be satisfied that “a reasonable jury
could not return a verdict for the nonmoving party.” Delta, 530
F.3d at 399.
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence which would ‘entitle it to a directed
verdict if the evidence went uncontroverted at trial.’” Int’l
Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1264-65 (5th Cir.
1991). The nonmoving party can then defeat the motion by either
8
countering with sufficient evidence of its own, or “showing that
the moving party’s evidence is so sheer that it may not persuade
the reasonable fact-finder to return a verdict in favor of the
moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in the
record is insufficient with respect to an essential element of the
nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden
then shifts to the nonmoving party, who must, by submitting or
referring to evidence, set out specific facts showing that a
genuine issue exists. See id. at 324. The nonmovant may not rest
upon the pleadings, but must identify specific facts that establish
a genuine issue for trial. See, e.g., id. at 325; Little, 37 F.3d
at 1075.
DISCUSSION
The first issue before the Court is whether a genuine issue
of material fact exists as to whether Crown Point has accomplished
Second Completion. In order to resolve this issue, the Court must
determine which party would have the ultimate burden of proof at
trial on this issue. Rozel filed this motion arguing that Crown
Point breached the parties’ agreement. The agreement provides that
Louisiana law and general maritime law govern the agreement. (R.
Doc. 39-5 at 3.) Under Louisiana law, “[t]he burden of proof in an
9
action for breach of contract is on the party claiming rights under
that contract.” Terry F. Day v. Moore, No. 2001-1447, p. 3 (La.
App. 4 Cir. 3/27/02); 815 So.2d 335, 338 (citing Rebouche v.
Harvey, 2001-2327 (La. App. 4 Cir. 12/91/01); 805 So.2d 332. Rozel
claims it is entitled to the $500,000 remaining in escrow because
Crown Point has not attained Second Completion. Accordingly, Rozel
bears the ultimate burden of proving Crown Point breached its
obligations under the agreement. For Rozel to succeed on its motion
for summary judgment it must first “come forward with evidence
which would entitle it to a directed verdict if the evidence went
uncontroverted at trial.” Int’l Shortstop, 939 F.2d at 1264-65;
Terry F. Day, 815 So.2d at 338 (citing La. C.C. art. 966(D)(1)).
Rozel argues that the testimony of Ralph Coleman, a land
surveyor employed by Oceaneering International, proves that Crown
Point has not attained Second Completion. (R. Doc. 54.) Mr. Coleman
conducted a sonar survey to determine whether any remnants of JMC
109 remained on the seabed of the Gulf of Mexico. Before conducting
the survey, Crown Point provided Oceaneering International with
the historical coordinates of the JMC 109. (R. Doc. 52-1 at 19.)
Based
on
this
information,
Mr.
Coleman
and
Oceaneering
International determined that remnants of the JMC 109 remained at
the site. See id. at 17-20; R. Doc. 54-1. Specifically, Oceaneering
International identified three different remnants of the JMC 109:
one segment
approximately
twenty-feet
10
by
twenty-feet,
another
thirty-feet by forty-feet, and another fifty-feet by seventy-feet.
(R. Doc. 54-1.) Neither Mr. Coleman nor Oceaneering International
were able to determine the composition of the objects identified
in the survey.
In response, Crown Point makes two arguments. First, Crown
Point argues that the survey conducted by Mr. Coleman “does not
conclusively show that any remnants of the JMC 109 exist at the
salvage site.” (R. Doc. 52 at 2.) Specifically, Crown Point argues
that because Mr. Coleman was unable to identify the composition of
the
objects
determination
on
the
seabed,
that
such
remnants
Oceaneering
were
the
JMC
International’s
109
is
merely
speculation. Id. at 3. Consequently, Crown Point argues that Rozel
has not satisfied its burden of proving that Crown Point failed to
attain
Second
Completion.
Second,
Crown
Point
argues
it
has
rebutted Rozel’s summary judgment evidence through the affidavit
of Mr. Dardar. (R. Doc. 42-4.) Mr. Dardar’s affidavit states that
he “conducted a Side-Scan Sonar Survey where the sunken JMC 109
was located, and [he] detected no remnants of the JMC 109.” Id. at
2. Crown Point did not submit a survey report, but rather relies
solely on Mr. Dardar’s statement to support its argument that it
has achieved Second Completion.
The Court finds that Rozel has submitted sufficient evidence
that portions of the JMC 109 remain on the seabed of the Gulf of
Mexico. The deposition testimony of Mr. Coleman and the survey
11
conducted
by
Oceaneering
International
demonstrate
that
large
remnants of at least one, if not both, of the barges remains at
the original site. Accordingly, the burden now shifts to Crown
Point to rebut this evidence and demonstrate a genuine issue of
material fact remained. See Int’l Shortstop, 939 F.2d at 1265.
Under Rule 56, the party opposing summary judgment cannot satisfy
its burden of proving a genuine issue of material fact by merely
asserting, by affidavit or otherwise, that a genuine issue exists
for trial. See 8 Wright & Miller, Federal Practice & Procedure §
2727.2
(4th
conclusory
ed.).
affidavit
“Conclusory
will
not
allegations
suffice
to
supported
require
a
by
a
trial.”
Travelers Ins. Co. v. Liljeberg Enters., Inc., 7 F.3d 1203, 120607 (5th Cir. 1994) (quoting Shaffer v. Williams, 794 F.2d 1030,
1033 (5th Cir. 1986)); see also, Broadway v. Montgomery, 530 F.2d
657,
650
(5th
Cir.
1976)
(nonmovant’s
affidavit
reciting
unsupported, conclusory allegations insufficient to avoid summary
judgment). Evidence in opposition to the motion that clearly is
without any force is insufficient to raise a genuine issue. See
Wright & Miller, Fed. Prac. & Pro. Civ. § 2727.2 (4th ed.) (citing
cases). Further, a party’s self-serving and unsupported statement
in an affidavit will not defeat summary judgment where the evidence
in the record is to the contrary. See Helia Tec Res., Inc. v. GE
& F Co., Ltd., No. 09-1482, 2013 WL 3157534, at *2-3 (S.D. Tex.
12
June 19, 2013) (citing Warfield v. Byron, 436 F.3d 551, 559 (5th
Cir. 2006); In re Hinsley, 201 F.3d 638, 643 (5th Cir. 2000)).
Mr. Dardar’s affidavit states that,
At all material times, [he] was the Manager of [Crown
Point], and in that capacity, [he has] personal
knowledge of the facts set forth in Crown Point’s
Opposition to Rozel’s Motion for Partial Summary
Judgment, as well as the Memorandum and Exhibits
attached thereto. Every statement therein is within
[his] personal knowledge and is true and correct. . . .
On or about May of 2016, [he] conducted a Side-Scan Sonar
Survey at the coordinates where the sunken JMC 109 was
located, and [he] detected no remnants of the JMC 109.
(R. Doc. 42-4, at 1-2.) Notably, Mr. Dardar’s affidavit does not
state that there are no remnants of the JMC 109 at the site.
Further, Mr. Dardar’s statement is unsupported by any evidence
within the record. Crown Point did not submit a survey to rebut
Oceaneering International’s survey, which depicted several large
portions of the JMC 109 remaining on the seabed. Further, the Court
must note that it seems highly unusual that Mr. Dardar would argue
that Crown Point has achieved Second Completion, yet has raised no
argument that it is entitled to the entire $500,000 remaining in
escrow nor ever requested Rozel release the $500,000. In fact,
Rozel contacted Crown Point several times in early to mid-2015
inquiring about the status of the JMC 109 and did not receive a
response. (R. Doc. 38-18.) Accordingly, the Court finds that Mr.
Dardar’s self-serving and unsupported affidavit does not preclude
summary judgment. See Helia, 2013 WL 3157534, at *2-3 (citing
13
Warfield, 436 F.3d at 559; In re Hinsley, 201 F.3d at 643). Thus,
there is no genuine issue of material fact that Crown Point has
failed to achieve Second Completion.
Crown
Point
also
argues
that
summary
judgment
is
inappropriate because “the weather conditions at the salvage site
from February of 2015 through July of 2015 created conditions that
would make continuing salvage operations dangerous.” (R. Doc. 42
at 3.) Crown Point argues that, pursuant to the initial agreement,
it cannot be penalized for delays arising from unsafe working
conditions. Id. The initial agreement provided that Crown Point
was not required to work in unsafe weather conditions, and that
Crown Point would not be penalized for stoppage due to such unsafe
conditions. (R. Doc. 39-5 at 3.) However, the parties’ amended
agreement provides:
All other terms and conditions of the [initial
agreement] which are not inconsistent with this
Amendment, including but not limited to the No Cure/No
Pay basis of work, shall remain in full force and effect.
Notwithstanding any provision in the [initial agreement]
. . . in the event First Completion and/or Second
Completion cannot be attained by [February 20, 2015], 2
subject to the force majeure delays described in the
[initial agreement], Rozel may, at Rozel’s sole option
and discretion, terminate Salvage Agreement with respect
to any unfinished work.
(R. Doc. 39-10) (emphasis added). Thus, the amended agreement gave
Rozel the unilateral right to terminate the agreement, subject
2
The parties agreed to extend the deadline from January 31, 2015 to February
20, 2015. (R. Doc. 39-15.)
14
only to force majeure delays enumerated in the initial agreement,
if the project was not completed by February 20, 2015. The force
majeure
delays
enumerated
in
the
initial
agreement
included
“severe storm, hurricane, tornado, or other natural disaster.” (R.
Doc.
39-5.)
Without
a
scintilla
of
evidence,
Mr.
Dardar’s
unsupported statement that the weather conditions were dangerous
and prohibited timely completion does not show that force majeure
conditions were present which prohibited Rozel from terminating
the agreement after February 20, 2015. See Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 246-52 (“The mere existence of a
scintilla of evidence . . . is insufficient” to defeat summary
judgment.”).
Further, even assuming that the “no penalty” provision 3 within
the parties’ initial agreement was not extinguished by the parties’
amended
agreement,
affidavit
is
Broadway,
530
Mr.
Dardar’s
insufficient
F.2d
at
to
650
unsupported,
preclude
summary
(nonmovant’s
self-serving
judgment.
affidavit
See
reciting
unsupported, conclusory allegations insufficient to avoid summary
3 The “no penalty” provision states that “[a]ny stoppage of work due to unsafe
conditions, [Crown Point] will not be penalized.” (R. Doc. 39-5 at 3.) The
amended agreement provided that, “All other terms and conditions of the [initial
agreement] which are not inconsistent with [the amended agreement], including
but not limited to the No Cure/No Pay basis of work, shall remain in full force
and effect.” (R. Doc. 39-10.) Thus, to the extent that the parties’ intended
cancellation of the agreement to be a penalty, it appears that the amended
agreement extinguished the initial agreement’s “no penalty” provision, because
the “no penalty” provision is inconsistent with the amended agreement which
provided Rozel the sole discretion to terminate the agreement if the project
was not completed by February 20, 2015.
15
judgment). There is no evidence within the record, other than Mr.
Dardar’s own statement, to support Crown Point’s argument that the
weather
created
unsafe
conditions
excusing
Crown
Point’s
performance. Accordingly, Crown Point has not produced sufficient
evidence to show its failure to attain Second Completion was
excused by force majeure or that it cannot be “penalized” due to
unsafe weather conditions.
The parties’ amended agreement provides:
In the event First Completion is attained, payment of
the remaining $500,000 of the Escrow Amount shall be
made to [Crown Point] on a No Cure/No Pay basis due and
payable contingent upon, and only if the second and final
wing wall unit is removed from its current offshore
location and brought to shore for scrap at a suitable
location as determined by [Crown Point]. . . . If for
any reason Second Completion is unable to be attained,
[Crown Point] will retain the $150,000 Mobilization Fee
and $400,000 of the Escrow Amount paid to [Crown Point]
if First Completion has been attained, but [Crown Point]
shall not be entitled to any portion of the remaining
$500,000 balance.
(R. Doc. 39-10) (emphasis added). Because the Court finds that
Crown Point has not attained Second Completion, and that force
majeure did not prevent Rozel from terminating the agreement
approximately six months after the extended deadline, the Court
finds
that
Crown
Point
is
entitled
to
retain
the
$150,000
mobilization and demobilization fee and the $400,000 for First
Completion. However, pursuant to the parties’ agreement, Crown
Point is not entitled to any portion of the $500,000 in escrow.
16
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Plaintiff’s Motion for Partial
Summary Judgment against Crown Point for Release of Remaining
Escrow Funds (R. Doc. 39) is GRANTED.
New Orleans, Louisiana this 20th day of October, 2016.
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
17
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