Supreme Rice, L. L.C. v. Turn Servs., L. L.C.

567 F.Supp.3d 742

SUPREME RICE, L.L.C.

v.TURN SERVICES, L.L.C.

CIVIL ACTION NO. 20-1212

United States District Court, E.D. Louisiana.

Signed October 19, 2021

Philip S. Brooks, Jr., Ronald Joseph Kitto, Brooks Gelpi Haase, L.L.C., New Orleans, LA, for Supreme Rice, L.L.C.

SECTION M (5)

ORDER & REASONS

BARRY W. ASHE, UNITED STATES DISTRICT JUDGE

Before the Court is a trial brief filed by third-party defendant SCF Marine, Inc. ("SCF Marine") seeking attorney's fees and costs.¹ Plaintiff Supreme Rice, L.L.C. ("Supreme Rice") and third-party plaintiff Turn Services, L.L.C. ("Turn") each file trial briefs in opposition,² and SCF Marine replies in further support of its position.³ Having considered the parties’ briefs and submitted evidence, the record, and the applicable law, the Court issues this Order & Reasons finding that SCF Marine is not entitled to attorney's fees from either Supreme Rice or Turn.⁴ The Court issues its Order & Reasons pursuant to Rule 52 of the Federal Rules of Civil Procedure. To the extent a finding of fact constitutes a conclusion of law, the Court adopts it as such, and vice versa.

I. BACKGROUND

This matter concerns contamination of part of a shipment of long grain milled rice ("LGMR"). On February 7, 2019, Supreme Rice entered into a contract with the United States Department of Agriculture ("USDA") to provide 12,666 metric tons of LGMR, valued at $5,810,940.00.⁵ The purchase order provided that Supreme Rice was to deliver the LGMR to an ocean-going vessel in Myrtle Grove, Plaquemines Parish, Louisiana, sometime between April 4 and 14, 2019, for shipment to Conakry, Guinea.⁶

Supreme Rice and SCF Marine entered into a contract under which SCF Marine provided seven hopper barges to transport the LGMR downriver to Myrtle Grove.⁷ The barges all had barge covers and grain doors designed to protect the cargo from the weather, but to allow for air flow and ventilation to prevent mold growth and overheating.⁸ Federal grain inspectors inspected the barges and found them fit to carry the cargo.⁹ Between March 15 and 26, 2019, the LGMR was loaded onto the barges for transport downriver.¹⁰

Turn operates a barge fleeting facility on the east bank of the Mississippi River near Myrtle Grove, Louisiana, that consists of a series of tiers where barges are parked side-by-side extending outward into the river.¹¹ The fleet is upriver from one coal/petcoke terminal and across the river from another.¹² When the barges carrying Supreme Rice's cargo arrived in Myrtle Grove on April 6, 2019, SCF Marine's subcontractor delivered them to Turn's fleet for later loading onto the ocean-going vessel.¹³ Prior to delivery of the barges to Turn, SCF Marine sent an email to Turn's dispatcher stating that the barges contained "LGMR."¹⁴ Turn disputes whether it received the email and whether its representatives understood that "LGMR" is an acronym for long grain milled rice.¹⁵ Turn inspected the barges, accepted them into the fleet, and was paid for its fleeting services.¹⁶ Three of the barges were placed in the upriver section of the fleet next to seven uncovered barges that Supreme Rice asserts were loaded with coal/petcoke.¹⁷ Turn claims the seven barges in question were loaded with petcoke, not coal.¹⁸ Due to a prior instance of cargo contamination, Turn has a standing order that is reissued to its fleet boat captains every twelve hours instructing them not to put milled rice barges close to coal barges.¹⁹ There was no written fleeting contract between Supreme Rice and Turn, nor between SCF Marine and Turn.²⁰

On April 17, 2019, surveyors from Russel Marine Group ("RMG"), working on Supreme Rice's behalf, inspected the LGMR cargo prior to transloading to the ocean-going vessel.²¹ The RMG surveyors discovered that the cargo in the three barges that were moored near the coal/petcoke barges was contaminated with black dust.²² Based on their contemporaneous observations, the RMG surveyors opined that the black dust was coal dust that blew with the winds from the nearby uncovered coal/petcoke barges and entered through gaps in the barges’ hopper covers and coaming.²³

On April 19, 2019, Michael Lagasse, a marine surveyor, was at Turn's fleet performing another job for Turn when Turn's claims manager, David Bullard, asked him to inspect the contaminated SCF Marine barges.²⁴ Lagasse reported to Bullard via email that "it appears that fleeted open hopper barges of pet coke in the near vicinity are blowing a very fine black dust onto nearby barges causing the contamination."²⁵ At his deposition, Lagasse testified that he did not see any black dust contamination on barges downriver from the SCF Marine barges at issue.²⁶ Subsequent testing indicated that the contaminate in Supreme Rice's cargo was likely green delayed petcoke, coal tar pitch, or both.²⁷

On April 16, 2020, Supreme Rice filed this suit against Turn pursuant to Rule 9(h) of the Federal Rules of Civil Procedure and the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions.²⁸ Supreme Rice alleged that it sustained a loss of $1,183,945.07 due to the damaged LGMR cargo.²⁹ After making deductions for salvage, Supreme Rice sought $1,071,827.49 in damages from Turn.³⁰ Supreme Rice further alleged that the cargo damage was caused by Turn's breach of contract, negligence, gross negligence, and want of due care and/or fault in breaching various obligations as a fleeter and bailee of the barges.³¹

In response to the suit, Turn filed an answer and third-party complaint bringing SCF Marine into the litigation as a third-party defendant.³² Turn denied liability for Supreme Rice's alleged damages and instead contended that SCF Marine had the sole responsibility for them.³³ Turn alleged that the seven barges were moored at its Myrtle Grove facility in the condition provided by Supreme Rice and SCF Marine, and that Turn never received any particularized instructions concerning the cargo or the barges.³⁴ Turn further alleged that SCF Marine was in control of the cargo and provided barges that were unseaworthy due to their open air vents which caused the alleged damage to the cargo through SCF Marine's breach of contract, negligence, gross negligence, and breach of express or implied warranty.³⁵ Turn sought indemnity and contribution from SCF Marine for any and all damages for which Turn may have been cast in judgment because of SCF Marine's actions.³⁶ Further, Turn tendered SCF Marine to Supreme Rice as a direct defendant pursuant to Rule 14(c) of the Federal Rules of Civil Procedure.³⁷

On June 30, 2020, SCF Marine moved to strike or dismiss Turn's Rule 14(c) tender, arguing that it violated the forum-selection clause in SCF Marine's contract with Supreme Rice, which specified that any dispute regarding the cargo would be resolved in the federal court located in St. Louis.³⁸ Turn opposed the motion.³⁹ In ruling on the motion, this Court recognized that because a Rule 14(c) tender proceeds as if the plaintiff had directly sued the defendant and third-party defendant, the third-party defendant "can use any defenses available to it ... against either the plaintiff or the defendant."⁴⁰ Although the Court held that the forum-selection clause was valid, it denied the motion to strike or dismiss because the proper mechanism to enforce it would have been a motion to transfer under 28 U.S.C. § 1404(a), not a motion to strike or dismiss.⁴¹

After this Court denied SCF Marine's motion to strike or dismiss, SCF Marine filed an amended answer in which it stated a breach-of-contract claim against Supreme Rice seeking attorney's fees to the extent that Supreme Rice accepted Turn's Rule 14(c) tender and pursued direct claims against SCF Marine.⁴² SCF Marine cited eight potential contractual breaches by Supreme Rice, including Supreme Rice's agreements with SCF Marine: to hold it harmless, and to defend and indemnify it; that Supreme Rice would inspect the barges before loading to ensure seaworthiness; and that any suit against SCF Marine be brought within nine months after the loss or damage occurred.⁴³ Supreme Rice insists that it did not accept the tender or pursue direct claims against SCF Marine.⁴⁴

The parties then participated in discovery. Fifteen depositions were held, twelve of which were noticed by SCF Marine.⁴⁵ In fact, SCF Marine was required to obtain permission from the magistrate judge to take the last two of these depositions of additional marine surveyors.⁴⁶

After thorough discovery and shortly before its close, Turn and Supreme Rice filed cross-motions for summary judgment.⁴⁷ Supreme Rice argued that it gave to Turn seaworthy barges that contained undamaged LGMR cargo, and that Turn, the fleeter, breached its duty to ensure that the barges were properly moored because they were placed next to barges that contained coal/petcoke in violation of Turn's internal policy of not placing LGMR next to a known contaminant.⁴⁸ Thus, said Supreme Rice, Turn breached the bailment relationship and acted negligently.⁴⁹

Turn, on the other hand, argued that, as a fleeter, its obligation was only to ensure that the barges were adequately moored so that they did not break away, sink, or sustain hull damage, and that it had no duty, legal or contractual, to fleet the barges in any particular place.⁵⁰ Turn also disputed that it knew the barges contained LGMR or what that acronym meant, and the source of the contamination.⁵¹ Turn further argued that SCF Marine had the duty to protect the cargo because it contracted to move the cargo in covered barges and that SCF Marine breached this duty by providing barges with covers and doors that were not airtight, rendering the barges susceptible to contamination, and thus unseaworthy for failing to protect the LGMR cargo.⁵²

SCF Marine also moved for summary judgment on Turn's third-party and Rule 14(c) tender claims, arguing that those claims were precluded by SCF Marine's contract with Supreme Rice which required claims to be filed within...