F & M Mafco, Inc. v. Ocean Marine Contractors, LLC, CIVIL ACTION NO. 18-5621

• Decision Date: 22 January 2020
• Docket Number: CIVIL ACTION NO. 18-5621
• Parties: F & M MAFCO, INC. v. OCEAN MARINE CONTRACTORS, LLC, et al.
• Court: U.S. District Court — Eastern District of Louisiana

434 F.Supp.3d 428

F & M MAFCO, INC.

v.OCEAN MARINE CONTRACTORS, LLC, et al.

CIVIL ACTION NO. 18-5621

United States District Court, E.D. Louisiana.

Signed January 22, 2020

Paul J. Politz, Stephen T. Perkins, Taylor, Wellons, Politz & Duhe, APLC, New Orleans, LA, Rachel Lauren Kovach, Taylor, Wellons, Politz & Duhe, APLC, Baton Rouge, LA, for F & M Mafco, Inc.

Ocean Marine Contractors, L.L.C., Morgan City, LA, pro se.

Andrew S. Respess, Frederick William Swaim, III, Galloway, Johnson, Tompkins, Burr & Smith, Joseph Patrick Briggett, Jay P. Farmer, Meredith S. Grabill, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, New Orleans, LA, for Ocean Marine Contractors, LLC, et al.

SECTION "F"

ORDER AND REASONS

MARTIN L. C. FELDMAN, UNITED STATES DISTRICT JUDGE

Before the Court are three motions: (1) ECapital's motion for summary judgment enforcing and recognizing its alleged security rights in three industrial cranes; (2) F & M's motion for summary judgment dismissing ECapital's claims; and (3) ECapital's motion for partial summary judgment precluding F & M from contending that it bought one crane from Ocean Marine Rentals. For the reasons that follow, ECapital's motion for summary judgment enforcing and recognizing its alleged security rights is GRANTED IN PART as to the cranes bearing serial numbers 41322 and 41468 and DENIED IN PART as to the crane bearing serial number 41608; F & M's motion for summary judgment is DENIED; and ECapital's motion for partial summary judgment is DENIED.

Background

At the heart of this security-rights dispute are three industrial cranes perched atop a Terrebonne Parish bayou. Two companies claim rights in the cranes: one as an innocent buyer, the other as a secured creditor. The cross-motions before the Court present the question whether the secured creditor's claim defeats the innocent buyer's.

F & M provides heavy-rigging packages, cranes, on-site tooling, and welding systems. Ocean Marine Contractors and Ocean Marine Rentals are family-owned shipbuilding companies. F & M bought three industrial cranes from the Ocean Marine entities, and ECapital claims security rights in all of them.

The case begins with a debt. In 2010, Regions Bank extended over $1 million in credit to Ocean Marine Contractors. As security, Ocean Marine Contractors granted Regions an interest in certain collateral, including "any and all of [Ocean Marine Contractor's] now owned and hereafter acquired equipment[.]" This commercial security agreement contained continuing-security and cross-collateralization provisions.

In 2015, F & M bought three industrial cranes from the Ocean Marine entities. The parties agree that Ocean Marine Contractors sold two of them; they dispute which entity sold the third—the crane bearing serial number 41608.¹ The dispute is understandable. The bill of sale for the third crane is printed on Ocean Marine Rentals letterhead, but it describes the crane as an Ocean Marine Contractors item.

As part of the sale, F & M leased two of the cranes back to Ocean Marine Contractors. But Ocean Marine Contractors failed to pay rent. So, F & M sued in Ohio state court. In its complaint, F & M said that it bought all three cranes from "OMC, LLC," shorthand for Ocean Marine Contractors. Based on this allegation and others, F & M obtained a default judgment against the Ocean Marine entities for over $770,000, plus interest and costs. Satisfaction did not follow; this suit did.

F & M sued the Ocean Marine entities in this Court to enforce the Ohio judgment. The Court entered summary judgment in F & M's favor, found that F & M was entitled to recognition and enforcement of the Ohio judgment, and entered a Federal Rule of Civil Procedure 54(b) partial final judgment so that F & M could "avail itself of enforcement remedies."

Enter ECapital. Following the Court's entry of a partial final judgment in F & M's favor, ECapital sought (and later obtained) leave to intervene to protect its alleged security rights in the cranes. In its intervenor complaint, ECapital says it is the successor-in-interest to Regions Bank's rights under the commercial security agreement with Ocean Marine Contractors. ECapital says those security rights cover the cranes F & M bought from the Ocean Marine entities. ECapital seeks recognition of its alleged security rights and an order directing the cranes to be seized and sold.

In response, F & M counterclaimed against ECapital for (1) "wrongful acts," (2) conversion, and (3) violations of the Louisiana Unfair and Deceptive Trade Practices Act (LUTPA), LA. REV. STAT. § 51:1405.² F & M says ECapital "wrongly seized" its cranes and moved them from accessible land controlled by the Ocean Marine entities to inaccessible land controlled by ECapital. F & M also says the cranes have "suffered considerable damages due to neglect and lack of maintenance" since ECapital seized them.

Now, ECapital and F & M cross-move for summary judgment on the validity of ECapital's security rights. ECapital moves, in the alternative, for partial summary judgment precluding F & M from contending that it bought the third crane from Ocean Marine Rentals.

I.

Summary judgment is proper if the record discloses no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if it "might affect the outcome of the suit." Id. at 248, 106 S.Ct. 2505.

If the non-movant will bear the burden of proof at trial, "the movant may merely point to an absence of evidence, thus shifting to the non-movant the burden of demonstrating by competent summary judgment proof that there is an issue of material fact warranting trial." In re La. Crawfish Producers, 852 F.3d 456, 462 (5th Cir. 2017) (citation omitted).

The Court emphasizes that the mere argued existence of a factual dispute does not defeat an otherwise properly supported motion. See Anderson, 477 U.S. at 248, 106 S.Ct. 2505. Nor do "[u]nsubstantiated assertions, improbable inferences, and unsupported speculation[.]" Brown v. City of Houston, Tex., 337 F.3d 539, 541 (5th Cir. 2003). Ultimately, to avoid summary judgment, the non-movant "must go beyond the pleadings and come forward with specific facts indicating a genuine issue for trial." LeMaire v. La. Dep't of Transp. & Dev., 480 F.3d 383, 387 (5th Cir. 2007).

In deciding whether a fact issue exists, the Court views the facts and draws all reasonable inferences in the light most favorable to the non-movant. See Midwest Feeders, Inc. v. Bank of Franklin, 886 F.3d 507, 513 (5th Cir. 2018). The Court "resolve[s] factual controversies in favor of the nonmoving party," but "only where there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts."

Antoine v. First Student, Inc., 713 F.3d 824, 830 (5th Cir. 2013) (citation omitted).

On cross-motions for summary judgment, the Court views each motion separately and asks, as to each, whether the movant has met the Rule 56(a) standard. See Shaw Constructors v. ICF Kaiser Engr's, Inc., 395 F.3d 533, 538-39 (5th Cir. 2004) (citing 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, FEDERAL PRACTICE AND PROCEDURE § 2720 (3d ed. 1998) ).

II.

Jurisdiction is based on diversity, so the Court applies Louisiana "substantive" law. See Boyett v. Redland Ins. Co., 741 F.3d 604, 607 (5th Cir. 2014) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ). Because Louisiana choice-of-law rules are "substantive," the Court applies them here. See Weber v. PACT XPP Tech., AG, 811 F.3d 758, 770 (5th Cir. 2016) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941) ).

The first step under Louisiana choice-of-law rules is determining whether the laws of two or more states conflict. Lonzo v. Lonzo, 17-0549, p. 12 (La. App. 4 Cir. 11/15/17), 231 So. 3d 957, 966. If they do not, the Court applies forum law; if they do, further analysis is required. See Am. Elec. Power Co. v. Affiliated FM Ins. Co., 556 F.3d 282, 285 n.2 (5th Cir. 2009). The parties here have not identified a conflict, and the Court has not found one. Accordingly, the Court applies Louisiana substantive law and turns to the cross-motions for summary judgment.

III.

In the first cross-motion, ECapital seeks summary judgment recognizing and enforcing its alleged security interests in the cranes. The Court considers the first and second cranes before turning to the third.

A.

ECapital says it has enforceable security interests in the first and second cranes. Whether it does turns on the secured-transaction provisions of Louisiana's Uniform Commercial Code. See LA. REV. STAT. § 10:9-101. In Louisiana, a security interest is enforceable against the debtor and third parties with respect to the collateral if three requirements are met: (1) value has been given, (2) the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party, and (3) the debtor has authenticated a security agreement that provides a description of the collateral. LA. REV. STAT. § 10:9-203(b).

The first requirement is met here because ECapital's predecessor-in-interest, Regions Bank, "gave value" for the security interests by loaning Ocean Marine Contractors over $1 million. The second requirement is also met: the Ocean Marine Contractors bill of sale for the cranes establishes that Ocean Marine Contractors had the "power to transfer rights" in them.³ The third requirement requires deeper analysis.

F & M contends that the third requirement is not met because the cranes are not "collateral" in that they are inadequately described in the security agreement. ECapital rejoins that the agreement adequately describes the cranes as collateral by reference to...