Rozel Operating Company v. Crown Point Holdings, LLC, et al
ORDER & REASONS. It is ORDERED that Rozel Operating Company's Motion for Summary Judgment (R. Doc. 73 ) is GRANTED. It is FURTHER ORDERED that International Metal Recycling, LLC is required to remove the liens on the oil wells at issue wi thin thirty (30) days of the entry of this Order. It is FURTHER ORDERED that in light of the Court's ruling on Rozel's Motion for Summary Judgment that Rozel's Motion to Exclude the Testimony and Opinions of Charles R. Norman (R. Doc. 70 ) is DENIED AS MOOT. Signed by Judge Carl Barbier. (gec)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ROZEL OPERATING COMPANY
CROWN POINT HOLDINGS,
LLC, ET AL.
ORDER & REASONS
Before the Court are two motions. First is Rozel Operating
Company’s (“Rozel”) Motion to Exclude the Testimony of Charles R.
Norman (R. Doc. 70), an opposition thereto filed by International
Metal Recycling, LLC (“IMR”) (R. Doc. 76), and reply filed by Rozel
(R. Doc. 83). Second is Rozel’s Motion for Summary Judgment (R.
Doc. 73), an opposition thereto filed by IMR (R. Doc. 77), a reply
by Rozel (R. Doc. 84), and a surreply by IMR (R. Doc. 88). Having
considered the motions and legal memoranda, the record, and the
applicable law, the Court finds that Rozel’s Motion for Summary
Judgment is GRANTED, and Rozel’s Motion to Exclude the Testimony
of Charles R. Norman is DENIED AS MOOT.
FACTS AND PROCEDURAL BACKGROUND
This action arises out of the 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 in the Gulf of Mexico.
(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. 39-4.) To comply with the order, Rozel entered into a written
agreement with Crown Point to salvage the JMC 109. Id. Unbeknownst
to Rozel, in early January, 2015, Crown Point hired IMR to perform
work related to the removal of the JMC 109. After making several
determined that Crown Point could not retrieve the JMC 109. On
July 22, 2015, Rozel gave formal notice that the salvage agreement
determined that Crown Point had hired IMR to perform work related
to the retrieval of the JMC 109.
On February 29, 2016, Rozel filed suit against Crown Point
and IMR. (R. Doc. 1.) IMR filed a Counterclaim against Rozel
rendered in connection with retrieving the JMC 109 in the amount
of $876,000. 1 (R. Doc. 7 at 13-14.) IMR also filed an oil and gas
lien on two oil and gas wells in Cameron Parish, Louisiana pursuant
to Louisiana Revised Statute § 9:4861, et seq., also known as the
Louisiana Oil Well Lien Act (“LOWLA”), which IMR believed were
owned by Rozel. Id. at 14; see also (R. Doc. 69-28.) On November
15, 2016, Rozel filed a Motion for Summary Judgment against IMR. 2
(R. Doc. 69.) 3 In short, Rozel argues that IMR has no claim for a
privilege. (R. Doc. 73-1.) In opposition, IMR argues, inter alia,
that it has satisfied the basic requirements for a LOWLA privilege,
and Rozel is liable to IMR in equity. (R. Doc. 77.) Rozel also
filed a Motion in Limine to Exclude the Testimony of Charles R.
Norman (R. Doc. 70.) Rozel argues that Mr. Norman’s opinions and
testimony should be excluded because they constitute impermissible
legal opinions and conclusions which he is unqualified to give,
reliability, and his opinions are unhelpful to the Court as the
finder of fact in this matter. (R. Doc. 70-2.)
are now before the Court on the briefs and without oral argument.
1 This amount is contested by Crown Point who asserts that its verbal agreement
with IMR was for no more than $250,000. See (R. Doc. 69-3 at 10.) However, Rozel
does not seek resolution of this issue in its motion for summary judgment. Id.
2 IMR asserts that Rozel’s motion for summary judgment does not address the
“equitable relief” available to, and prayed for by, IMR. (R. Doc. 77 at 1, n.1.)
3 Rozel’s initial motion for summary judgment was Record Document No. 69.
However, Rozel later filed an amended Motion for Summary Judgment. (R. Doc.
73.) Rozel’s amended motion corrected a minor typographical error, but did not
change the substance of its original motion.
1. Rozel’s Motion for Summary Judgment
First, Rozel argues that IMR is not entitled to a money
judgment pursuant to LOWLA. (R. Doc. 73-1 at 11.) Rozel asserts
any alleged rights pursuant to LOWLA are strictly in rem, and that
any claim for unpaid invoices may only be brought against Crown
Point. Id. at 12. Second, Rozel argues that IMR does not have a
LOWLA privilege. (R. Doc. 73-1 at 13.) Rozel asserts that IMR is
not a “contractor,” Rozel was not an “operator,” IMR did not have
a “subcontract,” and IMR’s work was not for “operations” contracted
for by Rozel, all as defined under the act. Id. at 13-16, 21-22.
Further, Rozel argues that IMR’s lien statement is “facially bogus
and contains blatant misrepresentations” and thus invalid. Id. at
22-24. Rozel further asserts that it is entitled to rescission or
dissolution of the salvage agreement, which in turn dissolves IMR’s
alleged subcontract. Id. at 19-21.
IMR argues that it has satisfied the basic requirements for
a valid lien under LOWLA. (R. Doc. 77 at 5.) IMR asserts that the
lien is in writing, signed on behalf of IMR, provides IMR’s name
and address, sets forth the amount claim to be owed and the nature
Department of Natural Resources. Id. at 7-12. Further, IMR argues
that the services it provided in attempt to retrieve the JMC 109
constitute “operations” as defined under LOWLA, and that Rozel was
the “operator” at the time IMR conducted such operations. Id. at
13-16. Finally, IMR argues that Rozel is liable in equity under
several theories. Id. at 17. IMR argues that Rozel is liable in
equity under the “judicial estoppel doctrine.” Id. at 18. Second,
IMR argues that the “No Cure/No Pay” provision of the agreement
between Rozel and Crown Point is inapplicable to IMR, because IMR
was not a signatory to that agreement. Id. at 18-19. Finally, IMR
argues that Crown Point was Rozel’s mandatary, that Crown Point
exceeded its authority by entering into an agreement with IMR to
exceeded authority by telling Joseph Dardar that it was sufficient
to cut the JMC 109 only to the mud line. Id. at 22. IMR argues
that it is evident that Rozel told Mr. Dardar this because Rozel
has now hired Zealous Energy Services, LLC (“Zealous”) to finish
removing the JMC 109 from the mud line only. Id.
In response to IMR’s Opposition, Rozel asserts that IMR has
not contested that a LOWLA privilege is strictly in rem and creates
no personal obligation. (R. Doc. 84 at 1.) Further, Rozel contends
that IMR has failed to cite to any legal authority to support its
“equity” claim, and that such claim should be dismissed because “a
subcontractor has no cause of action for a money judgment against
a well owner or operator for payment of invoices by a general
contractor to a subcontractor.” Id. at 2. Rozel also argues that
IMR’s “mandate” claim is wholly unsupported by its conclusory
allegations and statements which are unsupported by the record
evidence. Id. As to IMR’s alleged LOWLA lien, Rozel argues that
contractor of an “operator” to perform “operations.” Id. at 4.
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
Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All
reasonable inferences are drawn in favor of the nonmoving party,
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
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
It is well settled under Louisiana law that the privilege
created by La. Rev. Stat. § 9:4861—LOWLA—is strictly in rem,
against the property (lease or equipment) only, and no personal
liability is created by the privilege on the part of the owners of
the property subject to the privilege. Bordelon Marine LLC v. Devon
Energy Prod. Co., L.P., No. 14-1784, 2015 WL 1509493, at *3 (E.D.
La. April 1, 2015) (citing Guichard Drilling Co. v. Alpine Energy
Servs., Inc., 94-1275 (La. 7/3/95); 657 So. 2d 1307, 1315). IMR’s
To date, IMR has not been fully compensated for the
maritime salvage activities it has performed in
connection with retrieving the JMC 109 from the oil and
gas well site. IMR now seeks to secure payment for the
maritime salvage activities and services it has
performed in connection with retrieving the vessel JMC
109 from the oil and gas well site in the amount of
$876,000. On January 12, 2016, IMR filed an oil and gas
lien against Rozel, Crown Point and others in Cameron
Parish, Louisiana. The labor and services provided at
the oil and gas well site by IMR [for] Rozel, Crown Point
and others entitle IMR to a lien and privilege in
accordance with La. R.S. 9:4861 et seq. . . . As an
unpaid subcontractor which performed maritime salvage
services at the oil and gas well site, IMR is entitled
to seek recovery of its unpaid invoices from Rozel and
Crown Point. Additionally, as an unpaid subcontractor
which performed maritime salvage services at the oil and
gas well site, IMR is entitled to seek compensation
through sequestration of the oil and gas revenues coming
from the two above-referenced wells.
(R. Doc. 7) (emphasis added). It appears that IMR’s complaint seeks
a personal money judgment against Rozel and Crown Point pursuant
to the lien it alleges it has over the oil and gas well sites
listed in its counterclaim. However, as clearly explained by this
Court in Bordelon Marine LLC v. Devon Energy Production, Co., to
the extent that IMR seeks a personal money judgment from Rozel
pursuant to its alleged LOWLA lien, this claim must be dismissed.
See Bordelon, 2015 WL 1509493, at *3 (citing Guichard Drilling;
657 So. 2d at 1315).
The next issue is whether IMR has a LOWLA privilege. Under
LOWLA, a subcontractor may assert a lien over the property of an
operator or lessee in order to secure “the price of his contract
9:4862(A)(1). First, to have a LOWLA privilege, a subcontractor
must contract with a contractor of an operator. Rozel argues that
it is not an “operator,” as defined by LOWLA; thus, when Crown
Point contracted with IMR this did not give IMR a privilege or
allow IMR to assert a lien pursuant to LOWLA. See (R. Doc. 69-3 at
14.) To be an operator under LOWLA, Rozel must be a “lessee.” See
La. Rev. Stat. § 9:4861(7). A lessee is a person who owns an
operating interest. La. Rev. Stat. § 9:4861(6). An “operating
interest” is a mineral lease or sublease of a mineral lease, or an
interest in a lease or sublease that gives the lessee, either
singly or in association with others, the right to conduct the
operations giving rise to the claimant’s privilege. La. Rev. Stat.
§ 9:4861(5)(a). A mineral lease or sublease or an interest in the
lease or sublease is not an “operating interest” if an owner has
divested himself of the right to conduct the operations giving
rise to the claimant’s privilege by assignment, sublease, or
another form of mineral right before the claimant’s privilege is
established. La. Rev. Stat. § 9:4861(5)(b). “Operations” are every
activity conducted by or for a lessee on a well site for the
(i) Drilling, completing, testing, producing, reworking,
or abandoning a well.
(ii) Saving, treating, or disposing of hydrocarbons or
other substances produced from a well.
(iii) Injecting substances into the earth to produce or
enhance the production of hydrocarbons.
La. Rev. Stat. § 9:4861(4)(a)(i)-(iii).
IMR’s Lien Affidavit listed two wells:
Well Number 2:
Well Serial Number: 237827, Cameron Parish, Creole
Offshore Field (3008), Well Name VUB: SL 18251, No. 002.
Operating interest currently held by Northstar Offshore
Group, LLC, effective 11/01/2012 by acquisition from
Forza Operating, LLC, who acquired such operating
interest on 3/01/2010 from Rozel Operating Company. . .
Well Number 3:
Well Serial Number: 237828, Cameron Parish, Creole
Offshore Field (3008), Well Name VUB: SL 18251 No. 003.
Operating interest currently held by Northstar Offshore
Group, LLC, effective 11/01/2012 by acquisition from
Forza Operating, LLC, who acquired such operating
interest on 3/01/2010 from Rozel Operating Company. . .
(R. Doc. 69-28 at 1) (emphasis added). Rozel argues that throughout
the time IMR and Crown Point performed work to remove the JMC 109,
Rozel neither owned an operating interest in any of the wells or
operating interests referred to in IMR’s Lien Affidavit (i.e., was
not an “operator”), nor did the work performed by IMR constitute
“operations.” (R. Doc. 69-3 at 15.) In fact, Rozel argues that not
only did it not own the two wells listed above, but that Rozel’s
ownership and operatorship for all wells in the Creole Offshore
Field was transferred from Rozel to Forza Operating, LLC (“Forza”)
as of March 1, 2010. (R. Doc. 69-3 at 15.) Rozel has produced
documents demonstrating that Rozel conveyed its interest in its
wells located in the Creole Field effective March 1, 2010. (R.
Doc. 69-15 at 22-55.) Further, Rozel argues that the JMC 109 was
never “used in the construction and maintenance of” the wells
listed in IMR’s Lien Statement. (R. Doc. 69-3 at 22.) Rather, the
JMC was used as a breakwater barge on a different state lease, No.
18423, in connection with a completely different well, Well No. SL
IMR concedes that it “erroneously identifie[d] two wells
which are unrelated to the sinking of JMC 109” in its Lien
Affidavit. (R. Doc. 77 at 10.) However, IMR contends that such
error is inconsequential to the validity of its lien because “LOWLA
only requires that the lien ‘apprise’ recipients like Rozel of the
scope and nature of the lien.” Id. Specifically, IMR argues that
a privilege is not invalid if it fails to contain all of the
information required by La. Rev. Stat. § 9:4861(A), as long as the
statement of privilege “fairly apprises the recipient or person
against whom the privilege is asserted of the privilege claimed
and of the operating interest or other property upon which the
privilege is claimed.” (R. Doc. 77 at 10.)
The Court finds that IMR does not have a lien or privilege
under LOWLA. First, IMR has failed to produce any evidence that
Rozel was an operator, lessee, or possessed an operating interest
in the two wells listed in IMR’s Lien Affidavit at the time IMR
attempted salvage operations on the JMC 109. To the contrary, Rozel
produced the affidavit of William Rogers, the President of Rozel
Operating Company, who asserts that the JMC 109 was never utilized
in the operation, construction, maintenance, or otherwise anyway
connected with the two wells listed in IMR’s Lien Affidavit. (R.
Doc. 84 at 5; R. Doc. 69-14 at 3.) Rather, the JMC 109 was utilized
as a breakwater in connection with Well No. SL 18423, No. 2, a
completely different well on a different lease. Id. Further, Rozel
asserts that it was not the operator, did not own an operating
interest, a lease or sublease, and was not a lessee of either of
the wells listed in IMR’s Lien Affidavit, nor of Well No. SL 18423
Nos. 2 or 2D when: (1) Rozel signed the Salvage Agreement with
Crown Point on September 2, 2014; (2) When IMR was hired in January
2015; or (3) at any time thereafter, including throughout all work
performed by Crown Point and IMR in connection with the JMC 109.
Id. Finally, Rozel produced evidence that it transferred any
operatorship and ownership interest or operating interest in the
wells listed in IMR’s Lien Affidavit, and Well No. SL 18423 Nos.
2 and 2D to Forza as of March 1, 2010. Id.; see also (R. Doc. 6915 at 1-2, 6-7, 22-28, 35).
The only real argument IMR raises in opposition is that the
lien “apprises” Rozel of the scope and nature of the lien. (R.
Doc. 77 at 10.) However, even assuming that identifying an entirely
different well may “apprise” Rozel of the scope and nature of the
lien asserted by IMR, pursuant to La. Rev. Stat. § 9:4868(B)(1) a
well is “adequately identified” if the statement of privilege
gives: (1) the name and serial or other identification number of
the well; and (2) the name of the field where the well is located
conservation. IMR does not argue, let alone produced evidence,
that it “adequately identified” the wells it intended to lien.
IMR’s lien did not produce the correct serial number or other
identification number of the correct well. Further, as explained
above, IMR has produced no evidence that Rozel was an operator,
lessee, or had an operating interest in any well within the Creole
Field at the time of salvage operations.
Finally, Rozel argues that IMR’s “equity” claims should be
dismissed. (R. Doc. 84 at 1.) IMR first argues that Rozel is liable
in equity under the “judicial estoppel doctrine.” (R. Doc. 77 at
17-18.) IMR argues that it has removed significant portions of the
JMC 109 by cutting the vessel from the seabed, and “Rozel has
accepted IMR’s success.” Id. at 17. IMR contends that after Rozel
terminated the salvage agreement it retained Zealous to finish
cutting the JMC 109 above the mud line, and that from July, 2015
to August 26, 2016 no efforts were made to remove the JMC 109. Id.
Thus, IMR contends that Rozel is currently trying to take advantage
of the work IMR performed to get cash out of the registry in the
Middle District of Louisiana in the Cashman litigation. Id. IMR
contends that Rozel’s counsel submitted a report to Judge Lemmon
in the Cashman suit representing that a majority of the JMC 109
liability for IMR’s work and that it should be held liable under
the judicial estoppel doctrine. Id. at 18.
While the judicial estoppel doctrine is a claim in equity, it
is of no use to IMR in its attempt to recover its unpaid invoices
against Rozel. Judicial estoppel is “a common law doctrine by which
a party who has assumed one position in his pleadings may be
estopped from assuming an inconsistent position. The purpose of
the doctrine is to protect the integrity of the judicial process,
by preventing parties from playing fast and loose with the courts
to suit the exigencies of self interest.” In re Coastal Plains,
Inc., 179 F.3d 197, 205 (5th Cir. 1999) (internal citations and
quotations omitted). In order for judicial estoppel to apply and
prevent a party from asserting contrary positions in litigation,
two requirements must be satisfied: (1) the position of the party
to be estopped must be clearly inconsistent with its previous one;
and (2) that party must have convinced the court to accept that
previous position. Id. at 206; see also Blankenship v. Buenger,
No. 15–50974, 2016 WL 3538829, at *4 (5th Cir. June 28, 2016). IMR
has failed to articulate how this doctrine holds Rozel liable for
IMR’s unpaid invoices, gives IMR a privilege under LOWLA, or even
address whether Rozel’s position is “clearly inconsistent with its
condition.” In fact, IMR has failed to cite to, and the Court is
unable to locate, a single case in which this doctrine was used to
hold a party personally liable for an unpaid debt. Accordingly,
IMR’s claim in equity under the judicial estoppel doctrine is
IMR’s second “equity” argument is that Crown Point was Rozel’s
mandatary. (R. Doc. 77 at 21.) IMR argues that Crown Point exceeded
the authority it was granted by Rozel by entering into an agreement
with IMR to cut the JMC 109 out of the water, and a mandatary who
exceeds his authority is personally bound to the third person with
whom he contracts unless that person knew at the time the contract
was made that the mandatary had exceeded his authority or unless
the principal ratifies the contract. Id. at 22. Thus, IMR argues
that Rozel is liable for IMR’s unpaid invoices because Crown Point
exceeded its authority and Rozel ratified Crown Point’s action
when Rozel told Joseph Dardar that it was sufficient to cut the
JMC 109 off at the mud line.
First, IMR has failed to produce any summary judgment evidence
that there was a contract between Crown Point and Rozel whereby
Rozel conferred authority on Crown Point to transact one or more
affairs for Rozel. See La. Civ. Code art. 2989. Accordingly, IMR’s
argument under Louisiana Civil Code Article 3020 fails. Further,
evidence of such relationship, and the Court is not bound to accept
unsupported arguments. See Celotex, 477 U.S. at 323-26.
Finally, IMR’s Counterclaim alleged that it is in possession
operations, and that it seeks a judicial order permitting it to
sell the scrap metal to satisfy its outstanding unpaid invoices.
(R. Doc. 7 at 16.) Assuming that this is an “equity” argument, the
Court shall defer ruling. This issue was neither fully briefed by
the parties nor has IMR filed a motion seeking permission from
Court to sell the scrap metal.
IT IS HEREBY ORDERED that Rozel Operating Company’s Motion
for Summary Judgment (R. Doc. 73) is GRANTED.
IT IS FURTHER ORDERED that International Metal Recycling, LLC
is required to remove the liens on the oil wells at issue within
thirty (30) days of the entry of this Order.
IT IS FURTHER ORDERED that in light of the Court’s ruling on
Rozel’s Motion for Summary Judgment that Rozel’s Motion to Exclude
the Testimony and Opinions of Charles R. Norman (R. Doc. 70) is
DENIED AS MOOT.
New Orleans, Louisiana this 4th day of January, 2017.
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?