Classy Cycles, Inc. v. BP P. L.C. (In re Oil Spill By the Oil Rig "deepwater Horizon" in the Gulf Mexico)

558 F.Supp.3d 331

IN RE: OIL SPILL BY the OIL RIG "DEEPWATER HORIZON" IN the GULF OF MEXICO, ON APRIL 20, 2010

Applies to: Classy Cycles, Inc. v. BP p.l.c., et al.

MDL 2179

No. 16-05923

United States District Court, E.D. Louisiana.

Signed September 7, 2021

James P. Roy, Domengeaux, Wright, Roy & Edwards, Lafayette, LA, Stephen J. Herman, Herman, Herman & Katz, LLC, New Orleans, LA, for Plaintiff.

Alan Mark Weigel, Blank Rome LLP, New York, NY, for Marine Spill Response Corporation.

Francis Xavier Neuner, Jr., Ben Louis Mayeaux, Jed M. Mestayer, NeunerPate, Lafayette, LA, for Airborne Support, Inc., Airborne Support International Inc.

Leo Raymond McAloon, III, Michael D. Cangelosi, Gieger, Laborde & Laperouse, LLC, New Orleans, LA, for Dynamic Aviation Group Inc.

Kevin Richard Tully, Howard Carter Marshall, Christovich & Kearney, LLP, New Orleans, LA, for International Air Response Inc., Lynden Inc.

George Edmond Crow, Law Office of George E. Crow, Katy, TX, for Lane Aviation.

Michael J. Lyle, Eric C. Lyttle, Quinn Emanuel Urquhart & Sullivan, LLP, Washington, DC, Patrick Edward O'Keefe, Couhig Partners, LLC, Philip S. Brooks, Jr., Brooks Gelpi Haase, L.L.C., New Orleans, LA, Sylvia Ester Simson, Greenberg Traurig, LLP, New York, NY, for National Response Corporation, O'Brien’s Response Management L.L.C.

Harold J. Flanagan, Sean Patrick Brady, Flanagan Partners LLP, Andy Joseph DuPre, The DuPre Law Firm, LLC, New Orleans, LA, for DRC Emergency Services, LLC.

Frederick William Swaim, III, Galloway, Johnson, Tompkins, Burr & Smith, Cherrell Simms Taplin, Liskow & Lewis, New Orleans, LA, for Tiger Rentals Ltd., Modern Group GP-SUB Inc., Modern Group, Ltd.

David J. Beck, Pro Hac Vice, Beck, Redden & Secrest, LLP, Houston, TX, Deborah DeRoche Kuchler, Kuchler Polk Schell Weiner & Richeson, LLC, Kerry James Miller, Fishman Haygood, LLP, Phillip A. Wittmann, Stone, Pigman, Walther, Wittmann, LLC, Russell Keith Jarrett, Liskow & Lewis, New Orleans, LA, Donald E. Godwin, Pro Hac Vice, Godwin Lewis PC, Dallas, TX, J. Andrew Langan, Kirkland & Ellis, LLP, Chicago, IL, Michael J. Lyle, Quinn Emanuel Urquhart & Sullivan, LLP, Thomas Lotterman, Morgan, Lewis & Bockius, Washington, DC, for Defendant.

SECTION: J(2)

REVISED ORDER AND REASONS ^†

CARL J. BARBIER, UNITED STATES DISTRICT JUDGE

Before the Court is BP's Motion for Summary Judgment (Rec. Doc. 27103) against Classy Cycles, Inc., as well as Classy Cycles's opposition (Rec. Doc. 27147) and BP's reply (Rec. Doc. 27158). After considering the parties’ arguments, the record, and the applicable law, the Court grants in part and denies in part BP's motion.

BACKGROUND

The referenced member case is one of the last remaining claims for business economic losses arising from the massive oil spill in the Gulf of Mexico that began on or around April 20, 2010.

Plaintiff Classy Cycles is a motorized vehicle rental business in Panama City Beach, Florida. Classy Cycles rented street legal golf carts, mopeds, and motorcycles, and its business allegedly was "100% based on tourism." (Roof Decl. ¶ 2, Rec. Doc. 27147-5). At the time of the oil spill, Classy Cycles operated out of one central location with four depot locations. Classy Cycles claims that because of the oil spill, fewer tourists came to Panama City Beach, and, consequently, it had fewer customers. Classy Cycles seeks to recover these lost profits. Furthermore, Classy Cycles claims that the economic consequences of the oil spill deprived it of other business opportunities. Specifically, Classy Cycles asserts it would have opened one or more car washes and purchased an investment property known as Party Shack West. Classy Cycles filed a complaint against various BP entities alleging claims under the Oil Pollution Act of 1990 ("OPA"), 33 U.S.C. § 2701, et seq., and what the Court interprets to be general maritime law.¹ Classy Cycles's case was consolidated with this MDL as part of the "B1" pleading bundle, which consisted of private claims for economic loss and property damage. In 2018, the Court issued Pretrial Order No. 65 ("PTO 65"), which required all B1 plaintiffs to submit a sworn statement that provided certain information about their claim. (Rec. Doc. 23825). On October 2, 2020, the Court issued Pretrial Order 69 ("PTO 69"), which addressed the dozen or so remaining B1 cases in the MDL. (Rec. Doc. 26709). PTO 69 established a timeline for BP and Classy Cycles to conduct limited discovery and then file dispositive motions. (PTO 69 § II & Ex. 2, Rec. Doc. 26709). BP filed the instant motion for summary in accordance with PTO 69.

DISCUSSION

A.

As mentioned, Classy Cycles's complaint pleads claims under both OPA and general maritime law. Classy Cycles now admits that it cannot satisfy the elements for a non-intentional tort claim under general maritime law. (Opp'n at 1, Rec. Doc. 27147 ("Plaintiff does not contend that [it] suffered direct physical damage or losses due to commercial fishing.")). Accordingly, Classy Cycles's claim under general maritime law, including its claim for punitive damages, will be dismissed.

The rest of this decision concerns Classy Cycles's claim under OPA § 2702(b)(2)(E).

B.

OPA compensates a plaintiff for, inter alia, "loss of profits or impairment of earning capacity." 33 U.S.C. § 2702(b)(2)(E). BP argues it is entitled to summary judgment because the available documentary evidence shows that Classy Cycles did not lose any profits after the oil spill. BP points to Classy Cycles's income statements and tax returns, both of which reflect that Classy Cycles earned more, not less, money during the eight months following the commencement of oil spill (May-Dec. 2010), as compared to the same eight months in 2009.

On summary judgment, the initial burden is on the mover (BP) to show that there is no genuine dispute as to any material fact and the mover is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). One way BP can satisfy its burden is by identifying those portions of the record that it believes demonstrate the absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The income statements and tax returns satisfy BP's burden. The burden now moves to Classy Cycles to identify evidence that establishes a genuine factual dispute. Id. at 324, 106 S.Ct. 2548.

Classy Cycles points to deposition transcripts and sworn declarations where its owners—Rick Roof ("Roof") and Colleen Swab ("Swab"), Roof's daughter—testified that the 2010 income statement and tax return are incorrect. According to this testimony, Roof and his father (Swab's grandfather) loaned money to Classy Cycles in 2010 to keep the business afloat, but a former employee or accountant improperly recorded this money as revenue. (See, e.g. , Swab Depo at 63:11-22, Rec. Doc. 27103-44; Roof Decl. ¶¶ 6-9, Rec. Doc. 27147-5; Swab Decl. ¶, Rec. Doc. 27147-2). Consequently, the income statement and tax return overstate Classy Cycles's revenue by $792,769.12, assert Roof and Swab. (See, e.g. , Roof Decl. ¶ 11). Classy Cycles's owners further testified that these errors were discovered after the fact by a new accountant who examined the 2010 financial records. (Swab Depo. at 63:11-22, Rec. Doc. 27103-4). Classy Cycles attempts to corroborate this testimony by producing five promissory notes that it executed in favor of Roof and Swab, although these notes only add up to $317,769.12. (Rec. Doc. 27147-6).²

BP argues the owners’ declarations contradict their prior deposition testimony and should be ignored under the sham affidavit rule. "The sham affidavit doctrine prevents a party who has been deposed from introducing an affidavit that contradicts that person's deposition testimony without explanation because a nonmoving party may not manufacture a dispute of fact merely to defeat a motion for summary judgment." Free v. Wal-Mart La., LLC , 815 F. App'x 765, 766-67 (5th Cir. 2020) (unpublished) (cleaned up). The Court, however, does not view these statements as being in conflict. The owners testified at their depositions that the revenue figures were inflated because they improperly included loans, although they could not state the amount of the loans or to what extent revenues were overstated. The declarations make the same point, but they now provide specific amounts.

Under the current procedural posture, the Court cannot conclude that a genuine factual dispute does not exist. The present record raises questions of credibility and would require weighing evidence. However, the Court notes that PTO 69 allowed only limited discovery, as opposed to the more thorough investigation that would typically occur in civil litigation. Thus, while the Court does not grant summary judgment for BP at this time, it also does not foreclose the possibility that this issue could be revisited before trial, after full-blown discovery. This may be particularly appropriate if Classy Cycles cannot prove through documentation (bank records, etc.) the full amount it claims to have received in loans.

C.

This is not to say that Classy Cycles is entitled to a trial on all of its alleged losses. In addition to the losses allegedly suffered by its vehicle rental business, Classy Cycles contends the oil spill prevented it from starting other businesses, such as opening a car wash and purchasing investment property. BP is entitled to summary judgment against these alleged losses for two reasons.

First, Classy Cycles did not disclose these lost opportunity claims as required by PTO 65. PTO 65 ordered "each Remaining B1 Plaintiff" to "[d]escribe specifically the compensatory damages that [it] claim[s] ..., including the nature of the damage, the date(s) ..., the amount ..., and the calculations used to arrive at that amount." (Rec. Doc. 23825 at 2–3; see also Rec. Doc. 23825-1 at 1 ("submit[ting] an answer that is, for example, generic, vague, evasive, or misleading" violates PTO 65)). Indeed, "[i]t is imperative that...