Smith Maritime Inc v. Lay D/B Akpevweoghene et al

Filing 162

MEMORANDUM RULING re 138 MOTION to Withdraw Bland & Partners as Attorney ; 139 Amended MOTION to Withdraw Bland & Partners as Attorney filed by Lay D/B Akpevweoghene, Fenog Nigeria Ltd. For the reasons stated, the court finds that the motion to withdraw should be denied. Signed by Magistrate Judge Kathleen Kay on October 15, 2014. (crt,Benoit, T)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION

SMITH MARITIME, INC.

:

CIVIL ACTION NO. 11-cv-731

VERSUS

:

JUDGE TRIMBLE

LAY DRILLING BARGE
AKPEVWEOGHENE (EX CHEROKEE)
and its owner, FENOG NIGERIA, LTD.

:

MAGISTRATE JUDGE KAY

:

IN ADMIRALTY (IN REM)

MEMORANDUM RULING

Before this court is an opposed Motion to Withdraw as Counsel of Record and its
amendment filed by Bland & Partners, PLLC (hereafter “Bland”), current counsel of record for
defendants Lay Drilling Barge Akpevweoghene (ex Cherokee) and Fenog Nigeria, Ltd.
(hereafter “Fenog”). Docs. 138, 139. For reasons given below the motion as amended is
DENIED but, considering the explicit instructions given by Fenog to Bland, Bland’s further
involvement in this matter is limited to accepting notice of proceeding and service of pleadings,
which notice and pleadings are be forwarded by Bland to Fenog. If Fenog wishes to avoid the
effect of this ruling it may retain substitute counsel or appoint an agent in the Western District of
Louisiana to accept notice and service of process for this litigation only, which agency is
irrevocable during the pendency of this proceeding.
I.
Background
This matter began as a suit in admiralty by Smith Maritime, Inc., (hereafter “Smith”)
against defendant vessel and its owner seeking damages for an alleged breach of contract. Doc.
1 On the date the complaint was filed a warrant was issued to seize the vessel in port in the

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Western District of Louisiana. Doc. 6. Shortly after seizure an appearance was made by Fenog
Nigeria, Ltd., seeking release of the vessel upon deposit of funds to the account of its attorney,
which funds were to act as substitute security. Doc. 13. An order issued granting release of the
vessel upon deposit of the funds. 1 Doc. 17.
Fenog answered the complaint and filed its own against Smith Maritime. Docs. 24, 25.
The answer (Doc. 24) does not address Smith’s allegation of Fenog’s citizenship 2 but in its
Corporate Disclosure Statement Fenog states it is a “private limited liability company.” Doc. 21.
Fenog defends Smith’s complaint by claiming no privity of contract between the two entities and
sues for damages it claims to have sustained at the hands of Smith, damages exceeding
$10,000,000.00. From all pleadings available to the court it appears that Fenog is an artificial
entity created under the laws of some sovereignty other than the United States, in all likelihood
Nigeria. To the knowledge of the undersigned Fenog has no other presence in the United States
nor has it designated an agent for service of process here.
Shortly after filing its answer Fenog files a Third Party Complaint against Generation
Marine Services, Inc. (hereafter “GMSI”). Doc. 37. Fenog puts forth various causes of action
similar to those made against Smith but also seeks return of approximately $450,000.00 paid by
Fenog to GMSI as a security deposit. Total damages claimed by Fenog against GMSA exceed
$10,000,000.00.
This litigation proceeded in what appeared to the court to be ordinary course with various
motions being filed and trial dates being set but then continued and at least one settlement
conference taking place. Review of the docket sheet reveals problems started in December of
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Initially these funds were placed in the Bland trust account. Since the filing of the motions pending seeking
withdrawal Bland deposited the funds into the registry of this court. See Notice posed on docket 8/29/2014.
2
Smith alleged Fenog to be a Nigerian Corporation with its principal place of business in Warri, Delta State,
Nigeria. Later, when Fenog files its Third Party Complaint, it alleges it is a “foreign corporation or other legal entity
duly organized, created and existing under and by virtue of the laws of a foreign nation . . . .” Doc. 37, p. 1.
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2013 and have continued through this date, all related to Fenog’s failure to produce information
and ultimately the discovery by Smith and GMSI that Fenog may have spoliated evidence.
On January 9, 2014, Smith filed a Motion for Protective Order, to Stay Deposition, and
for Sanctions.

Smith alleged that Fenog had breached discovery obligations by failing to

preserve electronically stored information (“ESI”) and failing to reveal that, since inception of
the litigation, it had possession of a computer formerly belonging to Eddie Hill. Eddie Hill was a
former Fenog employee who was central to the dealings between these parties. Doc. 106. On
the date the motion was filed the district court signed an order staying depositions then scheduled
to be held in Norway and referring the remainder of the issues to the undersigned for further
proceeding. Doc. 107.
Smith filed a Motion to Compel, for Sanctions and Attorney Fees raising the same issues
as those raised in the Motion for Protective Order, i.e. that Fenog had failed to produce
documents previously requested and had failed to preserve CSI. Doc. 121. Fenog responded
claiming it had produced information as it was received, that there was nothing inappropriate in
its retention of the laptop belonging to Hill, and suggesting that its delays in acting were related
to its naiveté in dealing with the United States litigation process. Doc. 124. After hearing the
Motion to Compel was granted and the court took under advisement the issue of sanctions and
invited further briefing. Doc. 126.
On July 21, 2014, this court issued its ruling on sanctions, awarding Smith fees and costs
in the amount of $18,000 due to what we found to be misconduct on the part of Fenog in its
handling of discovery issues. Doc. 137. Fenog was ordered to pay this amount within fourteen
(14) days of the date of the ruling unless it sought review from the district court, in which case
the effect of the judgment would be stayed. Id. Fenog never sought review and the court has not

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been advised that the fine has been paid. In our ruling we also left open for consideration fees
and expenses that might be incurred at the future re-deposition of Eddie Hill, the re-deposition
being necessitated by Fenog’s recalcitrance in providing documentation.
Nine days following issuance of our order on sanctions Bland & Partners filed its first
Motion to Withdraw claiming it had been informed via correspondence that Fenog no longer
wished to continue with Bland & Partners as its counsel. Doc. 138. Bland & Partners amended
its motion the following day to afford contact information for Fenog in Nigeria, providing its
mailing address, telephone number, and an e-mail address for Sunny Akoni, General Manager
for Fenog. Doc. 76. This motion as amended is opposed. Doc. 145. As of the date of this
writing no attorney has come forward seeking to substitute himself or herself in the stead of
withdrawing counsel.
Smith and GMSI have now both filed for further sanctions against Fenog alleging
intentional tampering with the personal computer of Eddie Hill the result of which led to the
destruction of important documentation pertaining to the claims that form the basis of this
lawsuit – claims asserted affirmatively by Smith in its original complaint and claims asserted by
Fenog in its affirmative defenses and its own claims against both Smith and GMSI. Docs. 141,
143. Smith and GMSI seek the harshest remedies available for this alleged spoliation including
fines, recovery of costs, and striking of pleadings and defenses. These motions are currently
pending before the court and set for hearing. 3
II.
Discussion
In a telephone conference held between the court and counsel of record we discussed our
concerns. Our first concern is that Fenog is not a person but rather some form of separate entity
3

Also pending before the district court are several motions for summary judgment filed by all parties, the outcome
of which motions undoubtedly would be impacted by the ultimate resolution of the discovery issues.
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formed under the laws of a foreign sovereignty, presumablyNigeria. “The law is clear that a . . .
fictional legal person can only be represented by licensed counsel. Commercial & Railroad
Bank of Vicksburg v. Slocomb, 39 U.S. (14 Pet.) 60, 10 L.Ed. 354 (1840); In re Victor
Publishers, Inc., 545 F.2d 285 (1st Cir. 1976). This is so even when the person seeking to
represent the corporation is its president and major stockholder. In re Las Colinas Development
Corp., 585 F.2d 7 (1st Cir. 1978).” In re K. M. A., Inc., 652 F.2d 398, 399 (5th Cir. 1981). As
no counsel has stepped forward to substitute for withdrawing counsel it is unclear how we could
proceed to the conclusion of this litigation as there would be no one in the litigation who could
represent Fenog thus no one with whom the court or other litigants could speak.
Our next concern expressed in the telephone conference was how we could effectively
notice Fenog of any additional action, such as trial fixing and pretrial scheduling deadlines, when
there is no counsel of record in the proceeding and, as far as we know, Fenog has designated no
person or entity in the United States, much less the State of Louisiana, that could receive notice
or service on its behalf. Further we have no indication from anyone anywhere that Sunny Akoni,
the individual designated in Bland’s Amended Motion to Withdraw, has been duly authorized
under the laws of Nigeria to accept notice or service on behalf of Fenog. Accordingly if we were
to allow Bland to withdraw then the court would have no mechanism by which it could
effectively provide Fenog with adequate (as in legally binding) notice of proceedings which
would, in the opinion of the undersigned, call into question the binding nature (or lack thereof) of
any further proceedings. 4
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Given the behavior of Fenog thus far in this litigation we are concerned that it may choose at this point to simply
withdraw from participation now only to come forward later and question the efficacy of further proceedings
claiming their absence from the proceedings and their lack of adequate (legal) notice of further action. Given the
behavior of Fenog in this litigation thus far it requires no stretch of imagination to envision further post-judgment
proceedings to satisfy any judgment rendered in favor of Smith or GMSI (should that happen) against funds on
deposit or otherwise being met with claims by Fenog that it had not received proper notice of additional proceedings
and rely on its previously claimed naiveté to excuse its lack of participation.
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Concerns expressed in the telephone conference led this court to state the following:
On or before 9/4/2014 interested parties are to submit any additional briefing they
wish on the issue of whether, absent new counsel enrolling for the moving
defendants, the court is able to deny the 138 MOTION to Withdraw Bland &
Partners as Attorney filed by Lay D/B Akpevweoghene and Fenog Nigeria, Ltd.,
and the 139 Amended MOTION to Withdraw . . . but limit the scope on
involvement of counsel to strictly being a mechanism by which the court and
remaining parties can effectively notice Lay D/B Akpevweoghene and Fenog
Nigeria Ltd. so that this matter can be brought to a conclusion.
Doc. 155. No additional briefing was provided by any party.
So the issue before the court as we see it currently is whether the Motion to Withdraw as
amended should be granted or denied and, if denied, whether the court has the ability to limit the
involvement of withdrawing counsel to cater to the expressed desire of Fenog to terminate
Bland’s involvement while at the same time allowing this court the tools it needs to see this
litigation to a conclusion.
An attorney may withdraw from representation only upon leave of the court and a
showing of good cause and reasonable notice to the client. See Streetman v. Lynaugh, 674
F.Supp. 229 (E.D.Tex.1987). Consideration of whether good cause exists is left to the discretion
of the court. Matter of Wynn, 889 F.2d 644 at 646 (5th Cir. 1989), citing Streetman, 674 F.Supp.
at 234; accord United States v. Dinitz, 538 F.2d 1214 (5th Cir.1976) (en banc), cert. denied, 429
U.S. 1104, 97 S.Ct. 1133, 51 L.Ed.2d 556 (1977); Broughten v. Voss, 634 F.2d 880 (5th
Cir.1981).
Bland has stated that it has been terminated by Fenog and that statement has been
corroborated by a copy of an e-mail purportedly from Sunny Akoni to Bland. Doc. 145, Att. 1.
The court has been advised that Fenog has again contacted Bland and instructed that it is not to
act on its behalf in any capacity and that communication will be docketed and made part of this

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record by the court when received. Based on Fenog’s emphatically stated desire that Bland
withdraw from its representation of Fenog we find that good cause exists to allow withdrawal.
A finding of good cause, however, does not put an end to the inquiry. As noted by the
district court sitting in the Northern District of Texas:
Even where good cause for withdrawal exists, it is “incumbent on the court to
assure that the prosecution of the lawsuit before it is not disrupted by the
withdrawal of counsel.” Broughten v. Voss, 634 F.2d 880, 882 (5th Cir.1981).
This requires the Court to consider certain additional factors before allowing an
attorney to withdraw. Those additional factors include: “(1) the extent to which
the attorney's withdrawal will delay or disrupt the case; (2) the length of time for
which the case and any dispositive motions have been pending; (3) the time it
would take and the financial burden it would impose on the client to find new
counsel; (4) the financial burden the attorney would suffer if not allowed to
withdraw; (5) prejudice to the other parties; and (6) whether withdrawal will harm
the administration of justice.” White, 2010 WL 2473833, at *3; see also Dorsey v.
Portfolio Equities, Inc ., No. 3:04–cv–0472–B, 2008 WL 4414526, at *2
(N.D.Tex. Sept.29, 2008).
Hernandez v. Aleman Const., Inc., 2014 WL 1794833 (N.D. Tex. May 5, 2014).
For the stated reasons of concern noted above we do find that the prosecution of this
lawsuit will be substantially disrupted by allowing counsel to withdraw. This case has been
pending for several years, having been prolonged in no small part by the previously discussed
behavior of Fenog. We are being asked to consider imposing the severest of sanctions against
Fenog for the alleged spoliation of evidence and, should Smith and GMSI establish that
spoliation has taken place and that draconian sanctions are warranted, the viability of those
findings could certainly be subject to attack later by the unrepresented and potentially unnoticed
Fenog. Allowing Bland to withdraw at this point would indeed prejudice the other parties and
would harm the administration of justice.
We are mindful, however, of our obligation to consider the financial burden that Bland
would suffer if not allowed to withdraw. As we have noted previously Bland has been instructed

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to take no further action on behalf of Fenog. Given that to be the case then it would seem that
Bland would suffer no additional financial burden.
III.
Conclusion
For the foregoing reasons we find that the motion to withdraw should be denied. While
we do find just cause for Bland to seek withdrawal, the remaining factors to be considered weigh
heavily against allowing it.
Given instructions from Fenog to Bland that it take no further action, we excuse Bland
from participating in any hearings and we do not expect it to prepare any pleadings seeking
additional relief for Fenog or taking action to defend Fenog against the claims of Smith or
GMSI. This is in accord with the stated instructions of Fenog to Bland. However Bland will
remain in this litigation as counsel of record for Fenog so that the court may continue to notice
Fenog of further proceedings to allow this matter to be brought to a conclusion. Fenog, of
course, could avoid the unpleasant consequence of having Bland remain in this litigation by
retaining new counsel (something it has failed to do in the two months since Bland filed) or by
lawfully appointing another entity to accept notice and service on its behalf for this litigation
only. Absent either of these events Bland remains counsel of record for the limited purpose of
accepting notice and service to be forwarded to Fenog in the same manner Bland suggested the
court could contact Fenog in its Amended Motion to Withdraw. Doc. 139.
THUS DONE this 15th day of October, 2014.

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