Mexichem Fluor, Inc. v. Ace Storage Inc. et al

Filing 43

RULING granting 32 Motion for Partial Summary Judgment on Liability as Depositary Under Louisiana Law filed by Mexichem Fluor, Inc.. Signed by Judge Shelly D. Dick on 5/16/2014. (LLH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
MEXICHEM FLUOR, INC.
CIVIL ACTION
VERSUS
NO. 13-00141-SDD-RLB
ACE STORAGE, INC., ET AL.
RULING
Before the Court is Plaintiff Mexichem Fluor, Inc.’s Motion for Partial Summary
Judgment on Liability as Depositary Under Louisiana Law.1 Defendant, Ace Storage,
Inc., has filed a Memorandum in Opposition.2

In its Memorandum in Response to

Defendant’s Rule 60(B) Motion and in Support of Motion for Summary Judgment,
Mexichem responded to Ace’s opposition memorandum.3 For the following reasons,
Mexichem’s Motion shall be granted.
I.

FACTS AND PROCEDURAL HISTORY
For eleven years, Mexichem4 stored some 36-37 pallets of chemicals including

refrigerants known as R22, R134a, and R410A, in Ace’s warehouses on River Road.5
Mexichem paid Ace approximately $472,000.00 in storage fees. Due to limited supply,
Mexichem’s chemicals were extremely valuable, thus presenting a substantial theft
risk.6 Between April of 2010 and October of 2011, Ace relocated some of Mexichem’s

1

Rec. Doc. 32.
Rec. Doc. 35-2.
3
Rec. Doc. 36. To the extent Mexichem’s response addressed Ace’s opposition memorandum, the Court
treats Mexichem’s response as a reply brief.
4
Mexichem’s predecessor company, INEOS Fluor Americas, LLC, originally stored the chemicals in
Ace’s warehouse. Rec. Doc. 27, pp. 2-3. INEOS assigned its rights to Mexichem as to the May 2001
storage contract with Ace. Rec. Doc. 1, pp. 3-4; Rec. Doc. 1-4; Rec. Doc. 24, p. 2; Rec. Doc. 31, p.2.
5
Rec. Doc. 1, pp. 3 and 7.
6
Rec. Doc. 1, p. 7; Rec. Doc. 32-6, 26-27; Rec. Doc. 32-7, p. 2.
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chemicals to another Ace facility.7 As part of the moving process, Ace conducted an
inventory of Mexichem’s products on October 24, 2011 and discovered that large
quantities of Mexichem’s chemicals were missing.8

One week later, Ace informed

Mexichem about the missing chemicals.9 Since their disappearance, Ace has been
unable to locate the missing chemicals, and Mexichem denies ever receiving or
removing them.10 After Ace refused to replace the chemicals or provide compensation
equitable to the amount of chemicals lost, Mexichem filed this federal lawsuit on March
6, 2013 against Ace and its insurer, Essex Insurance Company, based on diversity
jurisdiction.11 Mexichem claims that, under Louisiana law, Ace breached its duty as
Mexichem’s depositary and also breached the parties’ contract. Ace denies fault.12
Mexichem moves for partial summary judgment urging Ace’s liability as a depositary
under Louisiana law.
II.

LAW
A.

Plaintiff’s Motion for Partial Summary Judgment

“The court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a

7

Rec. Doc. 1, p.4; Rec. Doc. 36-2, pp. 2-3.
Rec. Doc. 1, p. 4.
9
Rec. Doc. 1, p. 4. Ace informed Mexichem about the missing chemicals and related inventory report on
November 1, 2011. Rec. Doc. 36-1, p. 2.
10
Rec. Doc. 1, p. 6. Rec. Doc. 32-4, p. 12.
11
Rec. Doc. 1. Mexichem subsequently filed an Amended and Restated Complaint on July 1, 2013.
Rec. Doc. 24, p. 4; Rec. Doc. 31, p. 4.
12
Rec. Doc. 24; Rec. Doc. 31; Rec. Doc. 32-4, p. 13; Rec. Doc. 32-5, p. 1. Mexichem is a Delaware
Corporation that owns and operates a chemical plant in St. Gabriel, Louisiana, and has its principal place
of business in Tlalnepantla de Baz, Mexico. Rec. Doc. 27, p.1. Ace is a Louisiana corporation that
operates a storage facility in Baton Rouge, Louisiana, and has its principal place of business in Baton
Rouge, Louisiana. Rec. Doc. 31, p. 2. Essex is a non-Louisiana insurance company that writes policies
for coverage in the State of Louisiana.
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matter of law.”13 “When assessing whether a dispute to any material fact exists, we
consider all of the evidence in the record but refrain from making credibility
determinations or weighing the evidence.”14 A party moving for summary judgment
“must ‘demonstrate the absence of a genuine issue of material fact,’ but need not
negate the elements of the nonmovant’s case.”15

If the moving party satisfies its

burden, “the non-moving party must show that summary judgment is inappropriate by
setting ‘forth specific facts showing the existence of a genuine issue concerning every
essential component of its case.’”16 However, the non-moving party’s burden “is not
satisfied with some metaphysical doubt as to the material facts, by conclusory
allegations, by unsubstantiated assertions, or by only a scintilla of evidence.”17
Notably, “[a] genuine issue of material fact exists, ‘if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.’”18 All reasonable factual
inferences are drawn in favor of the nonmoving party.19 However, “[t]he Court has no
duty to search the record for material fact issues. Rather, the party opposing the
summary judgment is required to identify specific evidence in the record and to
articulate precisely how this evidence supports his claim.”20 “Conclusory allegations
unsupported by specific facts … will not prevent the award of summary judgment; ‘the
13

Fed.R.Civ.P. 56(a).
Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, at 398-99 (5th Cir. 2008).
15
Guerin v. Pointe Coupee Parish Nursing Home, 246 F.Supp.2d 488, at 494 (5th Cir. 2003)(quoting Little
v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)(en banc)(quoting Celotex Corp. v. Catrett, 477 U.S.
317, at 323-25, 106 S.Ct. at 2552)).
16
Rivera v. Houston Independent School Dist., 349 F.3d 244, at 247 (5th Cir. 2003)(quoting Morris v.
Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998)).
17
Willis v. Roche Biomedical Laboratories, Inc., 61 F.3d 313, at 315 (5th Cir. 1995) )(quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
18
Pylant v. Hartford Life and Accident Insurance Company, 497 F.3d 536, 538 (5th Cir. 2007)(quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
19
Galindo v. Precision American Corp., 754 F.2d 1212, at 1216 (5th Cir. 1985).
20
RSR Corp. v. International Ins. Co., 612 F.3d 851, at 857 (5th Cir. 2010).
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plaintiff [can]not rest on his allegations … to get to a jury without any “significant
probative evidence tending to support the complaint.”’”21
B.

Louisiana’s Law Regarding Depositary

Pursuant to article 2926 of the Louisiana Civil Code, “[a] deposit is a contract by
which a person, the depositor, delivers a movable thing to another person, the
depositary, for safekeeping under the obligation of returning it to the depositor upon
demand.” In order to create a contract of deposit, there must be an agreement and the
delivery, or the actual transfer, of the thing to the depositary.22 There are two types of
deposits:

a gratuitous deposit, where the depositary is not compensated, and an

onerous deposit, where the depositary is paid for the services it provides.23 “[U]nder La.
Civil Code Art. 2930, a gratuitous depositary need only exercise that degree of care that
it takes for his own property, while an onerous depositary must proceed with diligence
and prudence.”24 “An onerous depositary owes a duty to exercise reasonable care and
to take precautions against reasonably foreseeable danger to deposited property,”25 but
he is not an insurer of the deposit.26 “When a deposit is not returned as made, a
presumption arises of the depositary’s negligence or fault, and the depositary has the
burden to show that the loss or damage to the deposit was occasioned other than by his

21

Nat’l Ass’n of Gov’t Employees v. City Pub. Serv. Bd. of San Antonio, Tex., 40 F.3d 698, at 713 (5th Cir.
1994)(quoting Anderson, 477 U.S. at 249).
22
La. C.C. art. 2929. Comment C to La. C.C. art. 2929 provides that “[t]he word ‘delivery’ in Article 2929
signifies the transfer by the depositor to the depositary of the physical control of a corporeal movable.”
23
La. C.C. art. 2928.
24
Schaefer v. Paretti Imports, Inc., 997 So.2d 619, at 621 (La.App. 5 Cir. 10/28/08). La. C.C. art. 2930
was enacted in 2003.
25
Dollar Thrifty Auto Group, Inc. v. Bohn-DC, L.L.C., 23 So.3d 301, at 303-04 (La.App.5 Cir. 9/30/08).
26
Broussard v. Paul Fournet Air Service, Inc., 574 So.2d 541, at 542 (La.App. 3 Cir. 1991).
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own negligence.”27 Regardless of the type of deposit, “the depositary is liable for the
loss that the depositor sustains as a result of the depositary’s failure to perform such
obligations.”28
III.

ANALYSIS
The parties do not dispute that a contract of deposit existed between them.29 Nor

do the parties dispute the fact that Mexichem’s chemicals were stored at Ace’s
warehouse and that Mexichem’s chemicals went missing.30 It is also undisputed that
Ace has not reimbursed Mexichem for the loss of the chemicals.31 As an onerous
depositary, Ace is held to a higher standard than that of a gratuitous depositary.
Because Mexichem’s deposit has not been returned, and because the chemicals have
been lost or stolen while in Ace’s care as the depositary, Ace must rebut the legal
presumption that it is liable due to negligence or fault.
Although Ace contends it acted reasonably in safeguarding Mexichem’s property
through the use of these security measures to guard against theft at its warehouse,
even resolving all reasonable factual inferences in favor of Ace, the evidence does not
support a finding of reasonableness. It is undisputed that Ace was aware that the
subject chemicals were valuable and known to be “a very high theft item”; nevertheless,
no precautionary measures were taken. The chemicals were not stored in any safer
27

Schaefer v. Paretti Imports, Inc., 997 So.2d 619, at 621 (La.App. 5 Cir. 9/30/08). See also, Harper v.
Brown & Root, Inc., 391 So.2d 1170, 1173 (La. 1980). (Louisiana jurisprudence is clear that “[o]nce the
depositor establishes the existence of a deposit and the loss of the property while deposited, it is
presumed that the loss resulted from the depositary’s lack of care, and the depositary has the burden to
exonerate himself from fault.”).
28
La. C.C. art. 2930
29
Rec. Doc. 32-4, pp 10-11. Ace admitted to signing the contract to store Mexichem’s chemicals. Rec.
Doc. 32-4, p.10.
30
Rec. Doc. 32-4, p. 12. Rec. Doc. 32-7, p. 3.
31
Rec. Doc. 32-4, p. 13.
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area within the warehouse, and no additional security precautions were taken.32 In fact,
Ace’s owner testified that the company does not take any special precautions for
securing more valuable items, although he admitted it could be done.33 Ace did not
conduct self-initiated, in-house inventories of Mexichem’s products to ensure there was
no unexplained loss.34
At the time Mexichem’s products were stored at Ace’s warehouse, the security
system in place consisted of two external video cameras and a Sonitrol alarm system.
Although the owner of Ace testified that he installed the cameras, he sought no outside,
expert guidance in their placement.35 While the cameras were intended to monitor the
external areas of the property and deter theft, Ace’s owner admitted that the cameras
had limited coverage of the exterior and there was no video surveillance inside the Ace
facility.36

According to Ace, when tractor trailers were parked to load and off-load

materials, the cameras’ view of other loading and unloading areas was sometimes
obscured.37 For instance, if a trailer was in parked front of the first door on the south
side of the warehouse, surveillance of the other three loading doors on the south side
was obstructed.38 Nevertheless, the cameras were not repositioned.

32

Rec. Doc. 32-6, p. 6; Rec. Doc. 36-2, p.2.
Rec. Doc. 32-7, p. 13.
34
Rec. Doc. 36-2, pp. 4-5. Kim Hunt, former Ace employee, further explained that “[t]he only time we did
a physical count was … when Mexichem ordered one, and they would send … a representative from their
facility and we could count together.”
35
When asked how about how he determined where to place the cameras, he responded: “Just from, just
wanting to -- just to have the outside monitored in case somebody come to take something or break in.”
Rec. Doc. 36-1, p. 4.
36
Rec. Doc. 36-1, pp. 3-4. For instance, Ace’s owner testified that in “certain areas, if a trailer was in the
way, it would block your view of them.”
37
Rec. Doc. 36-1, p. 4.
38
Rec. Doc. 36-1, p. 4.
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33

Ace acknowledged that a forklift and an 18-wheeler would have been necessary
to move the large quantity of Mexichem’s chemicals that went missing.39 Yet, Ace knew
that its security cameras could not be relied on to accurately monitor the loading and
unloading activity.40
Additionally, the two exterior video cameras used by Ace had only a 30 day video
storage capacity.41

Ace’s owner testified that when he installed the cameras he

considered using a new video-tape every 30 days; however, the protocol was not
implemented. Instead, every 30 days, the video tapes recorded over prior video.42
Finding no unusual activity on its tapes, Ace presumes that the theft of Mexichem’s
chemicals happened more than 30 days prior to discovery of the loss.43
As for the internal areas of the warehouse, there were no video cameras in use.44
When asked why there were no cameras inside the warehouse, Ace’s owner offered the
conclusory statement that it was “just not the norm for warehousing.”45 Ace offered no
factual basis or other substantiation for its owner’s opinion as to warehouse “norms”.
Essentially, Ace relied on an alarm system to provide security for the interior of the

39

Rec. Doc. 36-1, p. 2; Rec. Doc. 32-7, p. 5.
Rec. Doc. 36-1, p. 4. Ace’s owner testified with the cameras you could not see the activity going on
inside of the trucks, such as the forklift driving onto the truck with the product it was carrying.
41
Smith testified that at the time the cameras were installed he questioned this process, acknowledging
that new tapes could have been purchased and put in for recording every thirty days. Rec. Doc. 32-7, p.
8.
42
Rec. Doc. 32-7, p. 8; p. 9.
43
Ace’s owner testified that after his employees’ reviewed the video tapes “[t]hey couldn’t find nothing.
That’s why we was assuming that it was 30 days prior to that, that it had been past the 30 days prior to
the day that we discovered it.” Rec. Doc. 32-7, p. 8.
44
Rec. Doc. 36-1, p. 3. Ace’s owner testified: “Nothing in the building, nothing. Everything was outside
for security, other than the alarm. When we locked the doors, we turned the alarm … on – but other than
that, the cameras were outside. Nothing inside.”
45
Rec. Doc. 32-7, p. 12.
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warehouse, which was only activated when the last employee left the warehouse.46
When employees were in the warehouse, the alarm system was turned off because it
was triggered by voices and the opening/closing of doors.47 Notably, at the time of the
Mexichem chemical theft, Ace’s owner testified that its employees were working 24 hour
days, 7 days per week. Hence, the alarm intended to secure the interior of the building
was virtually never activated.48
Additionally, Kim Hunt, former Ace employee in charge of the Mexichem account,
testified that, during the time period that Mexichem’s chemicals disappeared, one of
Ace’s forklift operators reported to her that upon his arrival to work early one morning he
discovered the roll-up doors (roll-up doors 1 and 2) where the Mexichem chemicals
were stored had been left open and unattended.49
There were also times when there was damage to the physical structure of the
warehouse that also damaged or affected the alarm system. In the event that the alarm
company was unable to immediately repair the alarm system, Ace’s employees would
bypass the alarm system.

50

Kim Hunt further testified that, structurally, Ace’s

warehouse had a “fairly big” hole, large enough for a person to enter and exit, in the
south end of the warehouse—where Mexichem’s chemicals were stored--prior to and at
the time Mexichem’s chemicals were stolen.

46

Additionally, Ace’s owner testified that,

Rec. Doc. 36-1, p. 2.
Rec. Doc. 36-1, p. 6. Ace’s owner testified that the alarm was voice and door activated.
48
Rec. Doc. 36-1, p. 6. When specifically asked how the alarm was used considering the 24 hour
days/shifts, Ace’s owner stated that the alarm is “not set then. If somebody is in the building, you can’t
set it, because it’s voice activated – it’s voice and door, you know, openers on the door.”
49
Rec. Doc. 32-6, p. 7.
50
Rec. Doc. 36-2, pp. 7-8. Rec. Doc. 36-2, p. 6.
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with the exception of work release employees, “pretty much everybody knew the [alarm]
code,”51 and approximately 12 to 15 people had a key to get into the warehouse.52
In a nutshell, pallets of chemicals were apparently stolen while entrusted to Ace’s
care, custody and control. The theft of this quantity of chemicals would have required
the use of a fork-lift and truck. Despite the fact that the chemicals were a known theft
risk due to their value, external surveillance of the loading areas was incomplete and
doors were reportedly left open and unattended at least once. Numerous employees
had keys to the facility, and use of the internal alarm system was inconsistent at best.
The alarm system was turned off much of the time and bypassed by employees other
times. Structurally, the facility was unsecure by virtue of a large hole on the building‘s
south side. Despite these shortcomings, Ace had no system to monitor the inventory
levels of the chemicals it stored, such as a routine count of the number of pallets in
inventory. Ace did not undertake any periodic review of the exterior surveillance
cameras’ video footage for suspicious activity. Hence, it was more than 30 days before
Ace became aware of the fact that a substantial quantity of Mexichem’s chemicals had
apparently been stolen.
Applying Louisiana law and applicable jurisprudence to the facts before it, the
Court finds that Ace has failed to overcome its burden of showing it was not negligent or
that it took proper precautions to protect Mexichem’s chemicals. In Federal Ins. Co. v.
C & W Transfer & Storage Co, Inc., the Louisiana Court of Appeal for the Fourth Circuit
found the defendant-depositary, an Oriental rug cleaning company, failed to rebut the

51

Rec. Doc. 36-1, p. 7.
Rec. Doc. 36-1, p. 5.
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presumption of fault in the theft of the plaintiffs’ rugs.53 The theft of the rug occurred
sometime over the weekend. The owner of the company explained: “The theft was
discovered and reported to him on a Monday morning…There were no signs of forcible
entry. Security measures consisted of a fence with a barbed wire top surrounding the
premises, securing the warehouse building every night, floodlights on the outside of
each door of the building, and a patrol service which patrolled the area two or three
times during the night.”54 The appellate court reasoned that while the proof showed the
defendant took precautions to secure the area at night, aside from “testimony that the
fence surrounds the premises the record is devoid of any evidence at all showing any
security measures taken during the daytime.”55 The court concluded that because the
theft could have occurred during the daytime—Saturday or Sunday—“defendants failed
to carry their burden of proving [the defendant] was without negligence of fault and they
are liable for the loss of the rug.”56
In another appellate decision from the Louisiana Fourth Circuit, Travelers Ins.
Co. v. Coleman E. Adler, Inc., the court found that a jewelry store had acted reasonably
by enlisting the expert advice and consultation of an alarm company for advice on its
alarm system because it was concerned with the protection of its premises from theft
and burglary.57 The jewelry company installed all of the equipment recommended by its
alarm company--“install[ing] a contact alarm system on its doors, windows, screens,

53

282 So.2d 563 (La.App. 4 Cir. 1973).
Id. at 565.
55
Id. at 566.
56
Id.
57
285 So.2d 381 (La.App. 4 Cir. 1973).
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vents and vault door.”58 The jewelry company’s employee testified that he activated the
alarm system at 6:00 pm before he left for the day, a few hours before the loss.59 While
the court took into consideration the fact that no alarm system is burglar proof, the effort
taken by the jewelry store to attain the advice of an expert on its alarm system carried
great weight.

The appellate court also noted that when compared with four other

jewelers in the area, it provided the greatest amount of effort to secure its customer’s
jewelry.
Unlike the depositary in Travelers, Ace sought out no expert guidance regarding
the placement of its two video cameras, even though Ace knew that the cameras
coverage was incomplete and sometimes obscured by routine activity.
Considering all of the evidence regarding Ace’s security measures, the Court
finds that Ace has not overcome its burden of showing that it was not at fault or
negligent in the loss of Mexichem’s chemicals.
IV.

CONCLUSION
For the foregoing reasons, Plaintiff Mexichem Fluor, Inc.’s Motion for Partial

Summary Judgment on Liability as Depositary Under Louisiana Law is hereby
GRANTED.60
Signed in Baton Rouge, Louisiana, on May 16, 2014

S

JUDGE SHELLY D. DICK
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
58

Id., at 383.
Id.
60
Rec. Doc. 32.
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