Opinion
Civ. No. 98-1602, SECTION "N".
January 26, 2000.
ORDER AND REASONS
Before the Court are Defendant Poseidon Oil Pipeline Co.'s Motion for Summary Judgment and Motion to Strike. For the following reasons, Defendant's Motion for Summary Judgment is DENIED and Defendant's Motion to Strike is GRANTED.
A. BACKGROUND
This case arises out of defendant Poseidon Oil Pipeline Co.'s ("Poseidon") efforts to construct an oil pipeline across the plaintiffs' oyster leases. The plaintiffs, Herbert A. Callais ("Callais") and CF Oysters ("CF"), allege that Poseidon damaged their oyster interests by building the pipeline in an unexpected location, failing to reclaim the lake bottom, and failing to complete the pipeline project on time. Poseidon now moves for summary judgment on the basis that the written release agreements that it executed with the plaintiffs must be given res judicata effect under Louisiana law, or, alternatively that plaintiff CF is not entitled to maintain an action for damages because its oyster lease was not executed until after the pipeline was completed.
Plaintiffs own two Louisiana oyster leases. At all times relevant to this litigation, plaintiff Herbert A. Callais owned Oyster Bedding Ground Lease No. 33925. CF Oysters was granted Oyster Bedding Ground Lease No. 35629 on July 25, 1997 by the Louisiana Department of Wildlife Fisheries and filed the lease in Terrebonne Parish on August 4, 1997.
Sometime prior to August 19, 1996, Poseidon began to consider building an oil pipeline near or through the area of plaintiffs' leases. As part of the pipeline application process, the Department of Wildlife and Fisheries and the Coastal Management Division of the Louisiana Department of Resources required Poseidon to contact leaseholders within the impact zone of the construction route. In accordance with this order, Richard Waldron, whom Poseidon hired to negotiate damage releases, sent a letter to Callais on August 19, 1996 informing him that Poseidon's pipeline construction operations were going to be conducted within 1500 feet of his oyster lease. To this letter, Waldron attached a map, which showed the proposed 24" crude oil pipeline crossing or running next to the northwest corner of Callais' lease. After meeting with Callais, Waldron learned that Callais and Peggy Fontenot were pursuing another oyster lease, number 35629, under the name "CF Oysters", that also would be affected by Poseidon's intended construction.
In their submissions, the parties contradict each other as to whether the pipeline, as initially proposed, crossed Callais' lease or ran alongside it. Regardless of the actual substance of the initial proposal, the parties agree that the initial proposal and the final product are not the same. Thus, it is irrelevant for the purposes of this summary judgment motion to decide the exact course of the pipeline, as initially proposed.
Poseidon, acting through Waldron, obtained damage releases from Callais and CF. Both releases provided, in part, that plaintiffs "release, waive and forever discharge" Poseidon "of and from any and all claims, demands, rights or cause [sic] of action of whatsoever kind which may arise from or by reason of damages that have occurred or may hereafter occur" to plaintiffs' oyster leases, "but only insofar as these aforesaid damages may occur or result from any and all operations, including but not limited to, and only by way of explanation and not limitation, accessing, dredging, laying, and constructing of" Poseidon's proposed pipeline. CF's release also stated that "[t]his agreement only holds if work is completed by September 1, 1997, the beginning of oyster bedding season for seed oysters." Callais signed his damage release on February 5, 1997, for which he received $30,000, and Fontenot signed a damage release on behalf of CF on March 21, 1997, for which CF received $20,000.
The Court has been provided with copies of the damage releases.
When the pipeline was actually installed in the summer of 1997, it did not conform to the initial proposal that Waldron had communicated to Callais. Specifically, the pipeline is not located as initially represented: rather than running on the west side of Callais' lease, the pipeline runs essentially straight through the middle of it. According to Callais, this route caused substantial damage to the reefal areas of his lease, damage that would not have occurred had the pipeline followed the course as initially proposed and that was beyond what he contemplated when he signed the release. In support of his contention that he had not anticipated an alternative pipeline route and the resultant damage, Callais testified at deposition that the initial proposal was attached to the damage release he signed. Moreover, Callais denies being informed of any changes to the initial pipeline proposal, even though there is some evidence that Poseidon changed its proposal twice prior to actual construction.
All parties agree that the pipeline as-built is in a location different than what was initially planned.
At his deposition, Waldron testified that his original assessment was that the reef would be undisturbed.
Although the pipeline was installed in the summer of 1997, there is a dispute as to when the construction was completed. Poseidon contends that it completed construction of the pipeline on July 25, 1997, within the time period set forth in the CF release. CF maintains that important aspects of the construction — specifically, back-filling of the pipe ditch — did not occur by September 1, 1997 and thus that the construction was not complete at that time.
On April 21, 1998, Callais and CF brought suit against Poseidon in Louisiana state court, claiming that Poseidon breached its legal and contractual duties by building the pipeline in an unexpected location, failing to reclaim the lake bottom, and failing to complete the pipeline project on time. Poseidon removed the case to this Court on the basis of diversity of citizenship and filed an answer. Poseidon now moves for summary judgment on all of plaintiffs' claims.
B. LAW AND ANALYSIS 1. Standard of Review for Summary Judgment
Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV, P. 56(c). The party seeking summary judgment bears the burden of demonstrating an absence of evidence to support the non-movant's case. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Where the opposing party bears the burden of proof at trial, the moving party need not submit evidentiary documents to properly support its motion, but need only point out the absence of evidence supporting the essential elements of the opposing party's case. See Saunders v. Michelin Tire Corp., 942 F.2d 299, 301 (5th Cir. 1991). To oppose a motion for summary judgment, the non-movant must set forth specific facts to establish a genuine issue of material fact, and cannot merely rest on allegations and denials. See Celotex, 477 U.S. at 324, 106 S.Ct. at 2552. A genuine issue of fact exists where the evidence is such that a reasonable fact finder could return a verdict for the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Factual controversies are to be resolved in favor of the nonmoving party. See Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). See also Superior Merchandise Co., Inc. v. M.G.I. Wholesale, Inc., 52 U.S.P.Q.2d 1935 (E.D. La. 1999).
2. The Res Judicata Effect of the Damage Releases
Under Louisiana law, parties may enter a "transaction or compromise", which the Civil Code defines as "an agreement between two or more persons, who, for preventing or putting an end to a lawsuit, adjust their differences by mutual consent, in the manner which they agree on, and which every one of them prefers to the hope of gaining, balanced by the danger of losing." LA. C.C. art. 3071. See Ortega v. State, 689 So.2d 1358, 1363 (La. 1997). In some cases, such "transactions or compromises" may be given res judicata effect. See LA. C.C. art. 3078 ("Transactions have, between the interested parties, a force equal to the authority of things adjudged. They cannot be attacked on account of any error in law or any lesion."); Ortega, 689 So.2d at 1364 ("A valid compromise may form the basis of a plea of res judicata."). Not every "transaction or compromise" is entitled to such preclusive effect, however. As the Louisiana Fourth Circuit Court of Appeals explained:
Transactions and compromises regulate the differences which appear clearly to be comprehended in them by the parties and they do not extend to differences which the parties never intended to include in them. La.C.C. art. 3073. A compromise is valid if there is a meeting of the minds between the parties as to exactly what they intended when the compromise was reached. Munna v. Mangano, 404 So.2d 1008 (La.App. 4th Cir. 1981). Ordinarily, the meaning and intent of the parties to a written contract must be determined by looking within the four corners of the instrument and cannot be explained or contradicted by parol evidence. La.C.C. art. 1848; Olivier v. Xavier University, 553 So.2d 1004 (La.App. 4th Cir. 1989), writ denied, 556 So.2d 1279 (La. 1990). An exception to this rule exists when there is a dispute between the parties as to exactly what matters were intended to be settled by the compromise agreement. La.C.C. art. 3079; Moak v. American Automobile Insurance Company, 242 La. 160, 134 So.2d 911 (1961); Munna v. Mangano, supra.Tarver v. Oliver H. Van Horn Co., Inc., 591 So.2d 1366, 1369 (La.Ct.App. 1991). In addition, a "transaction may be rescinded notwithstanding, whenever there exists an error in the person or on the matter in dispute. It may likewise be rescinded in the cases where there exists fraud or violence." LA. C.C. art. 3079.
The issue before the Court is whether the damage releases should be given preclusive effect. Poseidon argues that the damage releases are valid and therefore should be given such effect. Callais and CF argue that the releases should not be given preclusive effect because (1) plaintiffs did not intend the releases to include a different pipeline route through and the resulting damage to their oyster leases; (2) there was no meeting of the minds because Waldron, who negotiated on behalf of Poseidon, was not aware of Poseidon's true intentions; (3) there was an error in the releases because plaintiffs could not have anticipated the full extent of the losses that were sustained; and (4) as to CF's lease, Poseidon did not fulfill the condition of the contract with CF that required it to complete construction, as the pipe trench was not back-filled and the bottom was not reclaimed as Poseidon's permit required. Anticipating these arguments, Poseidon "maintains that the damage releases are valid and enforceable because the discrepancies between the initial proposed location of the pipeline and the as-built location is [sic] not a factual error as to the principal cause of the release." Memorandum in Support of Summary Judgment p. 6. In Poseidon's view, because both plaintiffs knew that the pipeline construction would affect their leases, "the discrepancy between the projected pipeline and the actual as-built location of the pipeline" was not the type of error that would invalidate the damage releases. Id. at p. 7.
After reviewing the summary judgment evidence, the Court finds that genuine issues of material fact exist as to the validity and/or scope of the damage releases. As is more fully set forth above, there is an active dispute over whether plaintiffs contemplated a change in Poseidon's initial pipeline proposal when they signed the releases. There is an equally active dispute as to whether Poseidon can be said to have "completed" the pipeline construction in light of CF's argument that Poseidon did not back-fill the trench. With these factual questions at issue, the Court cannot grant Poseidon's request for summary judgment on res judicata grounds.
3. Whether CF May Maintain an Action for Damages to an Oyster Lease Application
Poseidon argues in the alternative that "CF Oysters has no legal right to recover for damages herein because at the time the pipeline was permitted and constructed, CF Oysters did not own an oyster lease in Lake Barre", but had merely applied for a lease, which was not granted until July 25, 1997, after Poseidon claims pipeline construction was completed. Memorandum in Support of Summary Judgement p. 8. In short, Poseidon argues that it completed construction of the pipeline before CF acquired its lease and, thus, before CF acquired its right to sue.
Louisiana Revised Statute 56:423 gives the lessee of an oyster bed or ground the right to sue for damages to his or her lease. See LA. R.S. 56:423 B(1) ("The lessee of oyster beds or grounds who has obtained, recorded, and marked his lease in compliance with the law shall have the right to maintain an action for damages against any person, partnership, corporation or other entity causing wrongful or negligent injury or damage to the beds or grounds under lease to such lessee."). Merely applying for an oyster lease, however, does not create a property interest in the applicant. See Martinez v. Louisiana Dep't of Wildlife and Fisheries, 514 So.2d 140, 143 (La.Ct.App. 1978); cf. Vujnovich v. Louisiana Wildlife and Fisheries Comm'n, 376 So.2d 330, 331 (La.Ct.App. 1979) (holding that an existing lessee has the "privilege", but not the right, to renew an oyster lease). Thus, had the pipeline been completed prior to July 25, 1997, when Lease No. 35629 was granted, CF might not have been able to maintain an action against Poseidon. However, as described above, whether the pipeline was completed prior to July 25, 1997 is actively disputed. If the pipeline was completed after CF obtained its oyster lease, it might be able to recover damages stemming from the pipeline construction. Thus, summary judgment is inappropriate.
4. Motion to Strike
Poseidon moves the Court to strike plaintiffs' Exhibit "11", which is attached to plaintiffs' Memorandum in Opposition to Summary Judgment, on the grounds that it is not proper summary judgment evidence and should not be considered by the Court in ruling on its motion. Because plaintiffs have filed no opposition, the Court grants Poseidon's Motion to Strike. The Court has not considered plaintiffs' Exhibit "11" in ruling on this motion.
C. CONCLUSION
Because the Court finds that genuine issues of material fact exist, it finds summary judgment inappropriate. Because plaintiffs have filed no opposition, the Court shall grant Poseidon's Motion to Strike. Accordingly,
IT IS ORDERED that Defendant Poseidon Oil Pipeline Co.'s Motion for Summary Judgment is DENIED and Defendant Poseidon Oil Pipeline Co.'s Motion to Strike is GRANTED.
New Orleans, Louisiana, this 25th day January, 2000.