Gabarick v. Laurin Mar. (America) Inc.

• Decision Date: 21 May 2014
• Docket Number: No. 13–30739.,13–30739.
• Citation: 753 F.3d 550
• Parties: Stephen Marshall GABARICK, on behalf of himself and all others similarly situated; et al, Plaintiffs v. LAURIN MARITIME (AMERICA) INCORPORATED; et al, Defendants. American Commercial Lines, L.L.C., Plaintiff–Appellant v. D.R.D. Towing Company, L.L.C., Defendant–Appellee. United States Of America, Intervenor–Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

753 F.3d 550

Stephen Marshall GABARICK, on behalf of himself and all others similarly situated; et al, Plaintiffs

v.LAURIN MARITIME (AMERICA) INCORPORATED; et al, Defendants.

American Commercial Lines, L.L.C., Plaintiff–Appellant

v.D.R.D. Towing Company, L.L.C., Defendant–Appellee.

United States Of America, Intervenor–Appellee.

No. 13–30739.

United States Court of Appeals, Fifth Circuit.

May 21, 2014.

Glenn G. Goodier, Richard David Bertram, Esq., Jones Walker LLP, New Orleans, LA, John A.V. Nicoletti, Esq., Terry Lee Stoltz, Esq., Nicoletti, Hornig & Sweeney, New York, NY, for Plaintiff–Appellant.

Randolph Jean Waits, Waits, Emmett & Popp, L.L.C., New Orleans, LA, for Defendant–Appellee.

Sarah Susan Keast, Esq., Trial Attorney, Michael Anthony DiLauro, Esq., Trial Attorney, U.S. Department of Justice, Washington, DC, for Intervenor–Appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before JOLLY, GARZA, and HIGGINSON, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

American Commercial Lines (“ACL”) sought a declaratory judgment that certain vessel chartering agreements with D.R.D. Towing Company, LLC (“DRD”) were void ab initio. The district court dismissed the action pursuant to the equitable doctrine of judicial estoppel. It found that ACL's position in the declaratory judgment action—that the charters were void ab initio—clearly contradicted its earlier position in a related proceeding that the charters were valid, which had been accepted by the district court. ACL appeals from the district court's dismissal and seeks remand with instructions to declare the charters void ab initio.

I

ACL is a marine transportation enterprise that operates a fleet of barges and tugboats. ACL contracted with DRD to operate some of its tugs, including the MEL OLIVER.¹ This contractual relationship was created and governed by two charter agreements. Under the “Bareboat Charter,” ACL chartered its tugboat to DRD at the rate of $1 per day. Then, under the “Fully Found Charter,” DRD agreed to crew the tug and charter its services to ACL.

In the early morning of July 23, 2008, the MEL OLIVER was pushing an ACL barge, loaded with fuel oil, along the Mississippi River near the City of New Orleans. The DRD steersman operating the tug was unlicensed, in violation of Coast Guard regulations. As it moved towards its destination, the MEL OLIVER veered off course and collided with the tanker M/V TINTOMARA. The force of the impact separated the tug from the barge, which floated downriver and sank upstream of the Crescent City Connection Bridge. Three hundred thousand gallons of fuel oil were discharged into the Mississippi.

Several lawsuits followed. The United States brought an action against ACL under the Oil Pollution Act, 33 U.S.C. § 2701, et seq. DRD pleaded guilty to criminal charges for its role in the collision. ACL, DRD, and entities with interests in the M/V TINTOMARA (“the TINTOMARA interests”) each filed interpleader actions to limit, or preclude, their liability arising out of the collision under general maritime law. These limitations actions were consolidated and tried together (“the limitations action”). Lastly, ACL filed the instant declaratory judgment action to have the charter agreements with DRD declared void ab initio. Relying on DRD's admissions in its criminal guilty plea, ACL sought to prove that DRD entered into the charters with the intent to violate their terms, thereby perpetrating fraud in the inducement.

Initially, the declaratory judgment action and the limitations action proceeded in parallel. The district court denied ACL's motion for partial summary judgment in the declaratory judgment action, finding a dispute of material fact concerning DRD's intent to deceive ACL when forming the charters. Then, over ACL's objection, the district court granted two motions: it consolidated the declaratory judgment action into the limitations action, and it stayed the declaratory judgment action pending resolution of the limitations action. The stay order was entered pursuant to 28 U.S.C. § 2361, which permits a federal court to stay actions in state and federal courts during the pendency of a related interpleader. The district court's stay order stated that “the declaratory judgment action should be stayed pending resolution of the instant action.”

The limitations action was tried to the bench. Among the arguments offered to the court, ACL asserted that, pursuant to the valid charters, DRD was the owner pro hac vice of the MEL OLIVER. The district court accepted this argument, finding that fault for the collision lay solely with DRD, in personam, and with the MEL OLIVER, under DRD's control, in rem.

Following judgment in the limitations action, with the parties' consent, the district court proceeded to try the declaratory judgment action on the bench trial record from the limitations action. The court then granted the United States permissive intervention, as its interests in the Oil Pollution Act suit could be affected by a declaration that the charters were void ab initio.² After further briefing, in which the United States urged judicial estoppel, the district court dismissed the declaratory judgment action with prejudice, determining that “ACL's complaint seeking declaratory judgment to void the charters between itself and DRD is barred by judicial estoppel.” The court determined that it could not declare the charters void ab initio because it had “already accepted ACL's argument that valid bareboat charters existed....” ACL appeals from the dismissal, and from the district court's earlier denial of partial summary judgment.

II

We review a district court's decision to invoke judicial estoppel for abuse of discretion. Hall v. GE Plastic Pac. PTE Ltd., 327 F.3d 391, 396 (5th Cir.2003). “A trial court abuses its discretion when it bases its decision on an erroneous view of the law or a clearly erroneous assessment of the evidence.” United States v. Caldwell, 586 F.3d 338, 341 (5th Cir.2009).

A

Judicial estoppel is an equitable doctrine that defies “inflexible prerequisites or an exhaustive formula.” New Hampshire v. Maine, 532 U.S. 742, 751, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001). The doctrine “prevents a party from asserting a position in a legal proceeding that is contrary to a position previously taken in the same or some earlier proceeding.” Ergo Science, Inc. v. Martin, 73 F.3d 595, 598 (5th Cir.1996); see also New Hampshire, 532 U.S. at 749, 121 S.Ct. 1808 (“The doctrine of judicial estoppel prevents a party from asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding.”) (quoting 18 Moore's Federal Practice § 134.30, p. 134–62 (3d ed.2000)). One of the doctrine's purposes is “to prevent litigants from playing fast and loose with the courts.” Hall, 327 F.3d at 396. And, ultimately, judicial estoppel protects “the integrity of the judicial process.” United States ex rel. American Bank v. C.I.T. Constr. Inc. of Texas, 944 F.2d 253, 258 (5th Cir.1991). In this circuit, at least two requirements must be met before a party's argument may be judicially estopped. Id. First, the estopped party's position must be “clearly inconsistent with its previous one,” and second, “that party must have convinced the court to accept that previous position.” Hall, 327 F.3d at 396.³

B

In the limitations action, ACL claimed that the charter agreements made DRD the owner pro hac vice of the MEL OLIVER. The validity of the charters is a necessary predicate to this claim. The district court adopted ACL's position in deciding that DRD was solely liable for the collision. After lift of the stay order in the declaratory judgment action, ACL then asserted that the charters were void ab initio—that is, they never came into existence because of DRD's alleged fraud in the inducement. These two positions are clearly inconsistent, and, moreover, the district court adopted the first position in its judgment resolving the limitations action. See Hall, 327 F.3d at 396.

Here, ACL argues that its two positions are not inconsistent, claiming that, in the limitations actions, it only posited the “agreements were intended to be valid charters.” Simultaneously, ACL asserts that the district court's actual holding in the limitations action was that “there was no act or omission of ACL which caused or contributed to the collision”—not that the charters were actually valid instruments. Under ACL's reasoning, the district court's judgment in the limitations actions established that ACL “intended” and “expected” that the charters would be valid, not that they were actually binding. Accordingly, under ACL's view, there is no inconsistency between its positions.

ACL's characterizations of its previous argument and the district court's holding are unavailing. In the limitations actions, ACL did not argue that the charters were merely “intended” to be valid. Rather, it actively opposed the TINTOMARA interests' position that the charters were “crewing agreements,” which did not render DRD owner pro hac vice of the tug. ACL asserted that “there is no evidence that [the charters] were anything other than what they purported to be, valid and customary charters.” Most significantly, throughout the limitations action, ACL argued the position that, pursuant to the charters, “DRD became owner pro hac vice ” of the MEL OLIVER. This legal fiction of general maritime law is only tenable if the charters were in fact valid agreements. Accordingly, we reject ACL's claim that its positions in the two actions are not inconsistent. Similarly, we reject ACL's assertion that the district court did not accept its position in the limitations action. The district court's judgment establishes that it found “there was a valid bareboat charter that invested DRD with ownership pro hac vice along with a valid time charter that recognized DRD's status as ‘owner’ vis-à-vis ACL's...