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Following the massive BP oil spill, the State of Louisiana sought to protect a portion of its wetlands by constructing a massive “sand berm” (levee) just offshore from particular coastal areas.  The berm construction and related dredging activity allegedly caused damages to area oyster beds.  

Oyster leaseholders situated in Plaquemines Parish sued the State of Louisiana and various companies that were involved in the design, planning, construction, management and/or conduct of the dredging operations.  The lawsuit was filed in Plaquemines Parish (25^th JDC) – situs of the affected oyster beds.  The State and other defendants filed venue exceptions to transfer the lawsuit to the Parish of East Baton Rouge (19^th JDC) consistent with the terms of the leases and statutory law.

Although the oyster leases contained a mandatory forum selection provision requiring suits be brought in 19^th JDC, the district court denied the venue exception, holding that the forum selection clause was unenforceable based on a Louisiana statute (Code of Civil Procedure Art. 44) that bars waivers of objections to venue in advance of litigation.

The defendants filed an emergency writ application to the Louisiana Fourth Circuit Court of Appeal which reversed the district court and ordered the oyster damage suit transferred to 19^th JDC.  The appellate ruling held in pertinent part:

La. R.S. 13:5104 mandates that a suit alleging damages resulting from the State’s response to a disaster during a declared state of emergency must be filed in the Nineteenth Judicial District, East Baton Rouge Parish. Also the venue provisions of La. R.S. 56:427.1 and 432.1 concerning damages to oyster leases caused by coastal protection activities require venue in the Nineteenth Judicial District.  Furthermore, La. R.S. 49:214.5.6 concerning actions arising under oyster leases also requires venue in the Nineteenth Judicial District.

The ruling was issued on May 4, 2012 and it is not known whether the oyster fishermen will seek a further review by the Louisiana Supreme Court.

The case is Pelican Island Oysters, Inc. et al v. State of Louisiana, etc. et al, C.A. No. 58813, in the 25^th JDC for the Parish of Plaquemines.

The impact of Hurricane Katrina continues to be the subject of litigation in South Louisiana.  US District Judge Stanwood Duval of the United States District Court in New Orleans recently rendered a notable ruling that addressed a cause of substantial flooding in the city’s Lower Ninth Ward.

By way of background, Hurricane Katrina caused widespread and catastrophic flooding in Southeast Louisiana in August 2005, most notably in Orleans, Plaquemines and St. Bernard Parishes.  Much of the flooding resulted from a wind driven tidal wave from the Gulf of Mexico that preceded the onslaught of the storm.  However, most of the flooding in New Orleans was not caused by the tidal wave but resulted from a failure of the levee system at various locations throughout the city.  The levee failures allowed the waters of Lake Pontchartrain, the Mississippi River and other waterways to pour unrestrained into the low lying areas of the below-sea-level city. 

Some of the levee failures occurred on the Industrial Canal which cuts through the city along the western border of the Lower Ninth Ward.  As a result of the levee failures, the Industrial Canal flowed into and flooded thousands of homes, causing injuries and deaths and millions of dollars in property damage.  During the storm a barge floated out of the Industrial Canal and onto the land area immediately adjoining the location of one of the levee failures.  It was alleged by some that the failure was caused by such barge, contending that it had broken its moorings and floated free from a dock on the canal during the height of the storm and that such barge allided with the levee wall, causing the wall to fail.

Nearly a dozen lawsuits representing thousands of class-action type claimants were filed against the barge owner, the dock operator, fleeting and towboat operators.  Such lawsuits asserted that the barge should have been better secured or removed from the canal prior to the arrival of the storm.  The cornerstone of the suits was the allegation the barge knocked down the levee.  Eventually all claims relating to the barge were resolved with the exception of the claims directed to the dock owner which remained to be tried.

The first of the claims were tried as a non-jury “exemplar” trial in 2010 in which plaintiff counsel presented certain claims representing different categories of damages, i.e., homeowner, business owner, personal injury.  Judge Duval tried the selected representative claims on both liability and damages.  (Thousands of claims were held in reserve for future jury trials.  He ruled in favor of the dock owner following the trial.)   Prior to the exemplar trial, Judge Duval advised the parties that his findings would not be deemed res judicata and therefore nonbinding with respect to the remaining claims.

After a lengthy non-jury trial, Judge Duval ruled in favor of the dock owner.  He held that it would have been physically impossible for the barge to have caused the failure levee under the prevailing weather/wind conditions.  He concluded that the failure was caused by other forces.  Thus, even if the dock owner had negligently moored the barge and was legally responsible for its breaking loose during the storm, the dock owner could not be held responsible for the levee failure.  He therefore rendered a judgment in favor of dock owner. 

The recent ruling involves what happened next –

Although victorious at the initial trial, the dock owner still faced the prospect of numerous jury trials on the remaining claims that were not presented at the exemplar trial.

Having been unsuccessful in presenting its case in the non-jury trial before Judge Duval, plaintiff counsel hoped to achieve a different result in the jury trials that were to follow.  Counsel planned to use a different trial strategy and approach to the presentation of evidence to the jury. 

In order the head off the possibility of an adverse jury verdict in upcoming trials, the dock owner filed a preemptive motion for summary judgment.  In so doing, the dock owner cited much of the persuasive evidence that was presented at the 2010 trial.  Over the strenuous objections of the claimants, Judge Duval relied on much of the trial testimony that was presented to him at the earlier trial.  The claimant attorneys argued that the court was obligated to consider de novo all evidence that was to be presented at the upcoming jury trials without regard to the evidence presented at the earlier trial.  

In a very well written opinion, Judge Duval did not apply res judicata in addressing the summary judgment motion.  However, he deemed the previous trial testimony to be the equivalent of an affidavit that would be relevant for purposes of summary judgment – even if such testimony would not be equally admissible at a subsequent trial.   On that basis, Judge Duval found the previous testimony to be supportive of the dock owner’s position and granted summary judgment.

An appeal to the US Fifth Circuit is expected.

In re Katrina Canal Breaches, No. 05-1482 (E.D. La. Mar. 20, 2012).

The Louisiana First Circuit Court of Appeal recently ruled that state courts have jurisdiction over a vessel owner’s limitation defense based on the federal Shipowner’s Limitation of Liability Act defense.

In Graham v. Offshore Specialty Fabricators, Inc., 09-0117 (La. App. 1 Cir. 1/8/10); 37 So. 3d 1002, the court ruled that a barge owner was entitled to present a limitation defense to limit its liability to the value of its vessel.  Interestingly, the limitation defense was presented to the jury for determination at trial.  After allocating fault 60% to the barge owner, 25% to a second defendant (Jones Act employer) and 15% to plaintiff, the jury awarded total damages of $414,700.00.  However, the jury also granted limitation to the barge owner.  A judgment was rendered by the district court consistent with the jury verdict and such judgment limited the award against the barge owner to the limitation value of its vessel – $160,000.00.  On appeal, the appellate court affirmed the award of damages but reversed the jury finding that allowed the vessel owner to limit its liability.  One issue that was raised in the appeal was whether a state court has jurisdiction to grant a limitation defense when the vessel failed to institute a federal court limitation suit.  The appellate court ruled that state courts have such jurisdiction:

At oral arguments, the parties questioned whether the state court had jurisdiction over the limitation of liability defense raised by [vessel owner].  After researching this issue, we conclude that the state court did have subject matter jurisdiction, because [vessel owner] did not institute a separate limitation of liability procedure in the federal district court under 46 U.S.C. § 30511(a), thus distinguishing this case from the majority of those questioning the state court’s jurisdiction.  We agree with the Fourth Circuit’s thorough analysis of this issue in Howell v. American Cas. Co. of Reading, Pennsylvania, 96–0694 (La.App. 4th Cir.3/19/97), 691 So.2d 715, 730–32, writs denied, 97–1329, 1379, and 1426 (La.9/5/97), 700 So.2d 512, 515, and 518.

Therefore, the state court had jurisdiction over this issue, and this court has jurisdiction over the appeal of this issue.

U.S. District Judge Carl Barbier recently rendered a very important ruling in the Deepwater Horizon/BP Oil Spill suit that relates to the enforceability of contractual indemnity in the context of GROSS NEGLIGENCE and/or PUNITIVE DAMAGES. 

Judge Barbier addressed whether BP was contractually obligated to defend and indemnify Transocean, owner of the Deepwater Horizon, for pollution claims asserted by third parties.  The drilling contract between BP and Transocean, in pertinent part, required BP to defend and indemnify Transocean for damages and liability from spills “without regard to negligence of any party or parties and specifically without regard for whether the pollution or contamination is caused in whole or in part by the negligence or fault of” Transocean. 

BP argued to Judge Barbier that its duty to defend and indemnify did not extend to damages caused by Transocean’s gross negligence or to punitive damages that may be awarded against Transocean.  BP asserted that the words “negligence and fault” (as used in the contract) meant “ordinary fault” but not gross negligence or strict liability.  BP also contended that public policy prohibits indemnity for gross negligence and punitive damages. 

In a rather detailed opinion, Judge Barbier accepted BP’s arguments relating to punitive damages but disagreed with respect to gross negligence.  Judge Barbier ruled that public policy bars indemnity for punitive damages.  However, he held that public policy does not prohibit indemnity for gross negligence.  The Court found that the foregoing indemnity wording was intended to emphasize that BP assumed the risk even if caused by Transocean’s negligent conduct but was not intended to limit such conduct to ordinary negligence.  

Interestingly, Judge Barbier noted that, in some instances, gross negligence may indeed render certain contractual language unenforceable where one party agrees in advance to release the other contracting party from liability for damages suffered by the former, as a matter of public policy.  Such provisions are more rightly defined as “releases” rather than indemnity, according to the court.  

Judge Barbier explained that, in general, a “release” surrenders legal rights or obligations between parties to an agreement.  In comparison, a true indemnity agreement determines which party to a contract will ultimately bear the risk of injury to a third party.  In the first instance, the injured party has no recourse.  In the latter instance, the injured party is not restrained from seeking compensation.  Thus, the court ruled that gross negligence will render release language unenforceable, but will not prohibit indemnity. 

This ruling will certainly be appealed to the Fifth Circuit.

In re Oil Spill by the Oil Rig “Deepwater Horizon,“ MDL No. 2179 (E.D. La. Jan. 26, 2012).

In March 2010, Houston Casualty Company filed an Interpleader in the high profile consolidated USDC suits arising out of the July 2008 collision between a tug/oil tow and an ocean tanker in the Port of New Orleans.  Houston Casualty was the excess liability insurer of DRD Towing, owner of the towboat MEL OLIVER whose oil tow struck the upbound TINTOMARA which led to a catastrophic pollution event. 

Due to the various claims filed against DRD, its primary liability carrier filed an interpleader action within three weeks of the casualty and deposited its primary limits into the court registry. One and a half years later, the towboat’s excess insurer, Houston Casualty, filed a similar interpleader action and deposited its $9-million policy limits with the court.  The owner of the oil barge, ACL, opposed the Houston Casualty’s motion to deposit the policy limits, arguing the excess carrier must also deposit prejudgment interest on the interpleader sums in order to be released from liability for the casualty. 

ACL argued that Houston Casualty unreasonably delayed filing its action to deposit funds and thereby unjustly benefited from retaining its funds and depriving the potential claimants of the legal interest that would have accrued if the funds had been deposited sooner.  U.S. District Judge Ivan Lemelle agreed with ACL and ordered Houston Casualty to pay $495,369.86 in accrued pre-judgment interest at the rate of 3.5%.   

On appeal, the U.S. Fifth Circuit reversed Judge Lemelle, observing that an excess insurer’s liability does not arise until the primary carrier’s limits are exhausted.  Because the primary policy was not yet exhausted by judgments or settlements at the time Houston Casualty filed its interpleader, the 5^th Circuit panel ruled that Houston Casualty neither “unreasonably” delayed nor was “unjustly” enriched by not filing its interpleader earlier. Consequently, Houston Casualty was not required to pay pre-judgment interest on its policy limits.

Gabarick v. Laurin Maritime (America) Inc. et al, CA No. 08-CV-4007 (5 Cir. 2011).

District Judge Carl Barbier of the U.S. District Court for the Eastern District of  Louisiana issued a notable opinion last July in the context of a seaman’s right to recover maintenance and cure benefits following a work related injury.  In Atlantic Sounding Co., Inc. v. Parker, 2010 WL 2836130 (E.D.La. 2010), deckhand Parker sustained injuries to his left index and middle fingers when his hand became caught between a soft line and a bitt.  Sometime after the injury, Parker’s treating physician deemed him medically fit for light duty.  The employer, Atlantic, offered Parker the opportunity to continue his employment at his regular rate of pay under light duty conditions.  Parker rejected the offer of light duty. 

Atlantic filed a federal court complaint seeking declaratory judgment that it owed no maintenance to Parker because he failed to mitigate his damages.  Parker responded to Atlantic’s complaint with a counterclaim against Atlantic seeking damages under the Jones Act and general maritime law in addition to maintenance and cure.  The parties filed cross motions for summary judgment on the maintenance and cure issue.  Notably, Judge Barbier agreed with the employer’s position:

“Atlantic Sounding made an attempt to ensure that Mr. Parker could afford food and lodging by offering him the same pay and accommodating his medical restrictions [by offering light duty employment]. Consistent with…Fifth Circuit jurisprudence, a seaman who fails to mitigate damages forfeits his maintenance payments.”

The court’s ruling applied only to Parker’s claim for maintenance benefits and not to Parker’s entitlement to cure (medical treatment). Judge Barbier expressly stated: “Nonetheless, forfeited maintenance payments do not automatically preclude eligibility for cure because maintenance and cure benefits are two distinct components.”

Atlantic Sounding Co., Inc. v. Parker, 2010 WL 2836130 (E.D.La. 2010).

On October 14, 2010, the United States Court of Appeals for the Fifth Circuit affirmed the District Court’s dismissal of all claims asserted in a Limitation Suit against multiple dredging companies.  As stated by the Fifth Circuit in a published decision:

“We agree with the district court that the harm suffered by the Claimants was not a foreseeable consequence of the Limitation Petitioners’ allegedly negligent dredging operations.  Whereas in [In re Signal International LLC], the negligent barge-owner anticipated Hurricane Katrina’s approach and failed to secure the barges to withstand the expected storm surge, the Limitation Petitioners in this case had no knowledge of an immediate and pending natural disaster that would affect how they conducted their dredging operations.  Furthermore, it cannot be said that any dredger could have foreseen that performing its dredging activities negligently–as opposed to in conformity with the Corps of Engineers’ specifications–would probably result in the series of events culminating in the catastrophic damages that occurred during Hurricane Katrina.  No reasonable dredger could have anticipated that its negligence would make the difference between the levee systems holding or failing in the event of a hurricane.  The damages alleged here are ‘beyond the pale of general harm which reasonable might have been anticipated by negligent dredgers.’”

In re Katrina Canal, No. 08-30738 (5th Cir. Oct. 14, 2010) (published).

Disclosure: Mouledoux, Bland, Legrand & Brackett represented one of the Limitation Petitioners in this action.