Big Bucks Preserve, LLC v. Columbia Gulf Transmission Co et al
MEMORANDUM RULING re 31 MOTION for Summary Judgment GRANTING the motion. All claims by plaintiff, both for economic and non-economic damages, should be DISMISSED WITH PREJUDICE. Signed by Judge James T Trimble, Jr on 12/30/09. (crt,Burge, J)
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UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA MONROE DIVISION
TONY ~ ~v(OO~,CL~PK
WESTERN ~~rR~CT OF LOUISIANA
BIG BUCKS PRESERVE, LLC VERSUS COLUMBIA GULF TRANSMISSION CO.
CIVIL ACTION NO. O8-2O21~ JUDGE TRIMBLE MAGISTRATE JUDGE HAYES
MEMORANDUM RULING Before the court is a motion for summary judgment filed by defendant Columbia Gulf Transmission Company ("CGT~').' For the reasons expressed below, the court finds that COT's motion should be granted and, aecordingly, all claims against CGT by plaintiff Big Bucks Preserve, LLC ("Big Bucks") should be dismissed with prejudice.
BACKGROUND A. Relevant Facts
Plaintiff Big Bucks is a trophy buck game preserve located in Richland and Madison Parishes and organized as a limited liability company under Louisiana law. The preserve consists of approximately 550 acres which were originally owned by Big Bucks' owner and manager, James T. Strong ("Strong"). Strong transf~rredhe property into the assets ofthe LLC in August of2007. On t August 8, 2007, Big Bucks sold the property to Kerr-McGee Oil & Gas Offshore, L.P. ("Kerr-
`R. 31. 1
McGee").2 On August 15, 2007~ err-McGee granted hunting rights to Big Bucks as contemplated K in the Hunting Lease attached as "Exhibit B" to CGT's motion.3 On or about December 14, 2007, a pipeline owned by CGT and partially located on the 550 acres leased by Big Bucks, exploded. Plaintiff asserts that the explosion negatively impacted the number of bucks and, more specifically, trophy bucks killed on the preserve during the 2007 2008
hunting season. Plaintiff alleges that he and his family have been prevented from hunting on the property out of fear of future explosions. Plaintiff further asserts that, in addition to the loss of use of the property, the value of the leasehold interest has been diminished because of the explosion. Plaintiff seeks monetary relief før these alleged damages. Recognizing the existende of an agreement to mediate disputes arising under the Hunting Lease, the court requested briefs on the issue of the applicability of such agreement to the parties to this suit. Being satisfied that defendant COT was not a party to the Hunting Lease, we find that we possess diversityjurisdiction ovet this matter, given that plaintiff is domiciled in Louisiana and COT is domiciled in Indiana and the aiflount in controversy exceeds the statutory minimum, and the case is properly before the court.4
Summary judgment is m~ndated hen the w pleadings, the discovery and disclosure materials on file, and any 2R 40 at p. 2; Cash Deed~attached s "Exhibit A" to motion [R. 3 1-2]. a 3R. 31-3. The court note~hat Kerr-McGee is the present owner of the property, but is not t a party to this suit. ~28 U.S.C.
affidavits show that there is no genuine issue as to any material fact and that the thovant is entitled to judgment as a matter of law.5 In reviewing such evideilce, the court will draw all justifiable inferences in favor of the nonmoving party.6 An issue of fact i~genuine" when its resolution determines the non-moving party's " entitlement to relief ~ Once the movant has demonstrated "an absence of evidence to support the non-moving party's case," the burden shifts to the non-moving party to come forward with specific facts showing a genuine issue of fact for triatL8 Conclusory allegations and denials, speculation, improbable references, unsubstantiated assertions and legalistic argumentation are not an adequate substitute for specific facts showing that therØ is a genuine issue of fact necessitating trial.9 The court will not assume that the non-moving patty will meet its burden in the future, as such party is obligated to respond affirmatively to a moti~nfor summary judgment and may not rest upon the pleadings without specific factual allegatiOns in support of these claims.'0 Although the movant must demonstrate a lack of evidence as to one or more necessary elements of the non-moving party's case, it is not necessary that the movant negate the elements of
5Fed. R. Civ. P. 56(c)(2)~ elotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). C 6Anderson v. Liberty Lolpby. Inc., 477 U.S. 242, 249 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). 7Anderson, 477 U.S. at 248. 8Celotex, 477 U.S. at 32$; Matsushida Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). 9SEC v. Recile, 10 F.3d j093, `097
( th 5
`°Littlev. Liciuid Air Cort,p., 37 F.3d 1069, 1075 Wildlife Federation, 497 U.S. 811, 888 (1990)). 3
Cir. 1994) (citing Lujan v. National
the non-moving party's case.'1 ~f the movant fails to meet this initial burden, the motion must be denied, regardless of the non-møving party's response.'2
ANALYSIS A. Non-economic damages
COT asserts that summary judgment is appropriate as to all claims by Big Bucks for mental and emotional damages; loss of~njoymenvalue of 2007-2008 hunting season and future hunting t seasons; inconvenience; negligent infliction of emotional distress; and intentional infliction of emotional distress because such~non-economic amages are unavailable to plaintiff an LLC under d Louisiana law.'3 Big Bucks argues that aIli LLC is entitled to recover damages for the loss of enjoyment of hunting rights, citing a 2007 ruling by U.S. District Judge Robert James in Sporting Land, LLC v. CHC Energy, LLC.'4 In that case, the court considered a request for preliminary injunctive relief by Sporting Land, LLC, a hunting~ reserve similar to Big Bucks. The court found that the loss of p enjoyment of hunting land constituted an "irreparable injury" for purposes of injunctive relief analysis. Our reading of the rulir~ghowever, discloses that the court did not find that Sporting Land, , LLC was entitled to damages ~or loss of enjoyment of hunting land, but only that the loss of enjoyment of that land constiti4ted the type of irreparable harm contemplated by jurisprudence
"Id., citing Celotex, 477~U.S.at 323 ~Luian,
497 U.S. at 885-86.
`3R. 31 atp. 6; R. 1-4 at~J 2. 1 `4No. 07-1692, slip op. (W.D. La. Nov. 19, 2007). 4
concerning grounds for injuncti~~elief We do not find that the Sporting Land ruling supports the r premise argued by Big Bucks. The court has carefully r~viewed pplicable jurisprudence and finds that Big Bucks, as an a LLC under the laws of the State of Louisiana may not recover damages for negligent or intentional infliction ofemotional distress, ntiental and emotional harm or for loss ofenjoyment ofvalue of 2007
2008 hunting season.'5 "As an entity designed to produce profits, the only type of loss a
corporation can suffer is econon~iic."6 Plaintiff argues that, although Big Bucks is organized as an LLC, it is, in truth, merely the alter ego of its sole member ahd manager, Strong. Plaintiff asserts that Strong is so closely
connected with Big Bucks that ~hecourt should disregard the existence of the business entity and deny summary judgment as to nbn-economic damages, which would be available reliefs to Strong as an individual. In short, plaintIff advocates the piercing of its own corporate veil. Plaintiff points out that Big Bucks does not have a separate bank account and does not file a separate tax return. Finally, plaintiff argues that Strong has contributed more than $450,000 of his personal funds to develop the trophy buck preserve. COT argues that plaintift~hould not be allowed to pierce his own veil because such a result s is inconsistent with Louisianaju~ispmdence hich has insisted that entities enjoying the benefits of w limited liability must also endure the drawbacks of such protection. Under Louisiana law, th~ ersonality ofajuridical person, such as an LLC, is distinct from p
`5Walle Corp. v. Rockw~lGraphics Systems, Inc., 1992 WL 245963 (E.D. La. l 9/21/1992). `6Id. at ~5 5
that of its members.17 Louisiana law permits the piercing of a corporate veil under the "alter ego" theory. Generally, courts empløy this theory when the juridical person is used to "defeat public convenience, justify wrong, prot~ecfraud, or defend crjme."8 t Louisiana limited liability companies offer protection from liability for the LLC's debts, including tort liability, absent proofof fraud.'9 Given the obvious benefits Strong derives from the use of this business entity, the ~ourt finds that he may not now be permitted to avail himself of benefits which would flow from ~ot being organized as an LLC.2°Accordingly, the court rejects Big Bucks' argument that its own cdrporate entity should be disregarded. Finding no support for such a result in fact or in policy, the court accordingly finds that CGT's motion for summary judgment should be granted as to all clai,tns by Big Bucks for non-economic damages and all such claims should be dismissed with prejudice.
COT also argues that Bi~ ucks' remaining claim, asserting a decrease in the value of its B leasehold interest, is without merit because there is no proof that Big Bucks suffered any adverse effect from the explosion. CGT points out that Big Bucks makes no claim for physical damage to property. Moreover, COT argu~shat the bundle of rights Big Bucks derived from the Hunting t Lease from Kerr-McGee is limited and expressly disclaims any warranty ofpeaceable possession in
`7La. Civ. C. Art. 24. `8Smith v. Cotton's Fleet Service, Inc., 500 So.2d 759, 762 (La. 1987). `9La. R.S. 12:1320. 20Smith, 500 So.2d at 76~; ilton Hotels Corp. v. Traigle, 360 So.2d 245, 246 (La. App. 1 H Cir. 1978). 6
contemplation of the oil and gas activity which was ongoing at the time of the lease.2' COT argues that, given the lack of evidence td support plaintiff's claim for economic damages in the form of lost value, such claim is speculative ~nd should be dismissed. Big Bucks claims that, a~ result of the explosion, it has been prevented from hunting on a approximately half of its 550 acre lease out of fear ofthe possibility offuture explosions. Big Bucks explains that the deer, sensing th~imited hunting activity, have migrated to the portion of the lease l which Strong finds unusable for ~afetyreasons. Strong also asserts that the number of trophy bucks killed on the lease has decreasec~ eventy-five percent (75%) from the 2006-2007 season.22 Given s the limited length oftime Big Bu~kss entitled to hunt this lease, which ends in 2017, Strong asserts i 21R. 31-3 (Hunting Lease) at ¶ 1.8, which reads: LESSEE has consulted with its attorneys, has obtained title opini~ns egarding the Premises, and fully understands r and acknøwledges that the Premises are subject to numerous servitude~rights of way, mineral leases and other encumbrances , which wi~lmpact and disrupt the use of the Premises and i that LES SEE' s rights granted herein are subject thereto. In additio~to any knowledge that may be disclosed by i instrumer4ts of record, it is well known and understood in the comffiunity and by LESSEE that oil and gas exploration and prodi~ction perations will be conducted on the o Premises,~that ny and all related facilities will be constructed a on the Pr~mises, nd that a major pipeline will be constructed a on the Pr~mises.LESSEE recognizes and acknowledges that the activitlies and constructions planned or permitted on the Premises ~i1l disrupt, and possibly destroy its ability to conduct the activit~ies n the Premises described in this agreement, and o that, while it is the intention of this agreement to grant to LESSEE and to no4ie other the hunting rights described herein, nothing herein sh~ll e construed to grant LESSEE peaceable possession b of the Premises. 22Affidavit of James T. S~rong, ttached as "Exhibit A" to plaintiff's memorandum in a opposition to motion [R. 40-3]. 7
that each year is pivotal. Thus, the essence of Big Bucks' claim is that the quality of the hunting possible on the lease is diminished and, as such, the value of that asset is also diminished. COT cites the 1994 Louisiana Supreme Court ruling in Inabnet v. Exxon Corporation23 as authority that Big Bucks does n~t ave a cause of action against it in tort because COT's servitude h preexisted Big Bucks' lease. Although the court determined that, as to the land in which plaintiff and Exxon held coexisting prop~rty ights, plaintiff's oyster lease was subject to Exxon's right-ofr way which predated the oyster l~ase,he court did note that other factors must be considered, such t as: the temporal order of the leases or other rights, the nature of the rights, the type of activities normally incidental to the use for which the~ights were granted, the damage-causing r party's knowledg~e f the existence of the damaged party's o rights, the availability of alternative methods of exercising the right so as to pause little or no damage, and others.24 The ruling in Inabnet makes it clear that, though COT is not a party to the Hunting Lease executed by plaintiff and Kerr-McGee, the rights acquired by Big Bucks in that agreement are subject to the rights already gilanted to COT. While this does not foreclose, on its own, the possibility of tort liability by COT, it does create a context in which to analyze the issues before us. At this point it is imporbnt to note that plaintiff was the original owner of the acreage at issue, having sold it to Kerr-McGee only days before being granted hunting rights thereon. Therefore, the court finds that B~g ucks and COT were mutually aware of the rights of the other, B having, presumably, exercised cpexisting rights to the property for some time prior to the Hunting
23642 So.2d 1243 (La. 1994).
24M at 1252. See also J~irisich . Jenkins, 749 So.2d 597 (La. 1999) (temporal order of v acquisition of rights is not the ohiy factor to be considered under the court's ruling in Inabnet). 8
Lease. Moreover, we find that the operation of a natural gas pipeline on the acreage could not have been a surprise to Big Bucks, eve~without the warning issued in the Hunting Lease. While we make i no judgment as to CGT's operation of this specific pipeline, we do not find that the unfortunate eventuality of a pipeline leak or~ xplosion was outside the realm of possible outcomes given the e nature of natural gas production., This is confirmed by Big Bucks' own argument that it is aware of 5 a prior explosion on this same ~~ilpeline.2Apparently this prior incident did not discourage Big Bucks' desire for the hunting rig~htso the property at issue. Finally, as admitted by the parties, the t right-of-way belonging to CGT thost certainly predates the Hunting Lease, as it is referred to therein. Accordingly, the court finds that the hunting rights acquired by Big Bucks were subject to the right-of-way previously granted in favor of COT and, as reasoned above, the unfortunate explosion was not outside the realm of disturbances both known by plaintiff and specifically contemplated in the Hunting Le~se. Additionally, the court finds that plaintiff has not demonstrated a diminution in the trophy buck population on the property;, but, rather, only asserts that the herd has migrated to the portion of the property plaintiff chooses not to hunt. Given, as discussed above, the warnings and cautions acknowledged by plaintiff in the~ease, we find that plaintiff has failed to demonstrate the existence l of a genuine issue of fact as to loss of value of the leasehold, the resolution of which would entitle plaintiff to recovery of economic damages. Accordingly, the court finds that plaintiff's claim for economic damages in the form of loss of value of the leasehold should be dismissed with prejudice.
25R 40-2 at p. 2. 9
CONCLUSION The court has carefully considered the law and argument presented by the parties and finds,
as reasoned above, that no genuine issues of material fact exist with respectto plaintiff's entitlement to non-economic damages by virtue ofplaintiff's status as an LLC under Louisiana law. Further, the court finds that no genuine issue ~f material fact remains as to plaintiff's entitlement to damages for loss of value of its leasehold given the limited nature of the rights it acquired under the Hunting Lease executed between Big Bucks and Kerr-McGee. Finally, the court also finds that plaintiff has failed to present any evidence ~f diminution of the trophy buck population as a result of the explosion, merely arguing that it has chosen not to conduct hunting on portions of the lease and that the deer have instinctively moved into the areas not being hunted. Accordingly, the court finds that all claims by plaintiff, both for economic and non-economic damages, should be dismissed With prejudice. A judgment in conformity with these findings will be issued this day.
Alexandria, Louisiana December 30, 2009
JgtMES T. TRIMBLE, JR. UNITED STATES DISTRICT JUDGE
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