Ifg Port Holdings, LLC. v. Lake Charles Harbor & Terminal Dist.
| Decision Date | 06 March 2019 |
| Docket Number | DOCKET NO. 16-cv-00146 |
| Parties | IFG PORT HOLDINGS, LLC. v. LAKE CHARLES HARBOR & TERMINAL DISTRICT, d/b/a THE PORT OF LAKE CHARLES |
| Court | U.S. District Court — Western District of Louisiana |
IFG PORT HOLDINGS, LLC.
v.
LAKE CHARLES HARBOR & TERMINAL DISTRICT, d/b/a THE PORT OF LAKE CHARLES
DOCKET NO. 16-cv-00146
UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION
March 6, 2019
MAGISTRATE JUDGE KAY (by Consent)
MEMORANDUM RULING
This litigation involves a contractual dispute between IFG Port Holdings, LLC, (hereafter "IFG") and Lake Charles Harbor & Terminal District, d/b/a The Port of Lake Charles, (hereafter "the Port"). Plaintiff alleges that the basis of our jurisdiction is diversity of citizenship as set forth in 28 U.S.C.A. § 1332. Doc. 1, p. 2, ¶ 4.
Before the court are five Motions for Partial Summary Judgment filed by the Port and one Motion for Partial Summary Judgment filed by IFG.1 Docs. 280, 285, 286, 288, 289, 291. Each motion is opposed. Docs. 300, 301, 302, 303, 304, 315.
For the following reasons we conclude that the Port's Motion for Partial Summary Judgment on Claims Related to MAG Charges (doc. 285) should be GRANTED, the Port's Motion for Partial Summary Judgment Regarding the Dredging Permit (doc. 289) should be DENIED, the Port's Motion for Partial Summary Judgment Regarding Costs to Elevate DMPF 3 (doc. 288) should be DENIED, the Port's Motion for Partial Summary Judgment on Breach Of Warranty and Fraudulent Inducement Claims (doc. 291) should be DENIED, the Port's Motion for Partial
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Summary Judgment on LUPTA Claims (doc. 286) should be DENIED, and IFG's Motion for Partial Summary Judgment on LUPTA Claims (doc. 280) should be DENIED.
This suit was initiated by a complaint filed by IFG on January 19, 2016.2 Doc. 1. The disputed contract is a Ground Lease Agreement ("the Lease") between the parties effective August 15, 2011. Doc. 341, att. 26, pp. 158-211, [D49]3. That Ground Lease Agreement was the end result of protracted and detailed negotiations between the two parties and stipulated the terms under which IFG would construct a grain terminal on property owned by the Port. The Lease also described certain dredging activity that was to occur in the waterway adjacent to the property being improved. Id. at p. 172, § 8.9.
In its Amended, Supplemental, and Restated Complaint IFG alleges multiple instances of breach of contract by the Port, violations of the Louisiana Unfair Trade Practices Act ("LUTPA"), fraudulent inducement or detrimental reliance, and asserts claims for declaratory and injunctive relief. Doc. 236. IFG seeks monetary damages in connection with its breach of contract claims, reimbursement of sums it paid under protest, and injunctive and declaratory relief. Id. at p. 15, ¶ 20, p. 16, ¶¶ 22, 23, p. 22 ¶ 27, p. 27, ¶ 35, p. 28, ¶ 28, p. 29, ¶ 37.
In Answer to the Amended, Supplemental, and Restated Complaint [doc. 254] the Port acknowledged the existence of the contract but denied or recast much of the nefarious conduct of
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which it was accused in the original complaint.4 It asserts seventeen affirmative defenses to IFG's complaint. Id. at ¶¶ 38-70. The Port also asserted several counterclaims against IFG seeking declaratory relief and attorney fees and expenses incurred defending against the claims brought by IFG. Doc. 37, pp. 40-42, ¶¶ VI-XIII, Doc. 84, pp. 14-16, ¶¶ XIV-XVIII, Doc. 131.
A. Events leading up to the execution of the Lease
The execution of the lease was the culmination of several years of negotiations between IFG and the Port. In order to be competitive in the market IFG expressed its desire to service large vessels known as Panamex vessels which would require a marine depth at the Port's docks to be at least 42 feet. Doc. 341, att. 24, p. 26-27 [D4].
On January 16, 2008, IFG and the Port executed a Letter of Intent ("LOI") which summarized the parties' understanding of terms and conditions regarding a future lease agreement. Doc. 341, att. 1, pp. 174-76 [P25]. Briefly, IFG sought to develop an export grain terminal which would service large vessels on property owned by the Port and which would be subject to a long-term lease. Id. The LOI indicates that Berth No. 8, which would be the site of the terminal, was at that time being redeveloped by the Port. Id. at p. 175. The LOI states that the water depth alongside Berth No. 8 was 37 feet when it was dredged in 2004 and that the Port will "take reasonable steps" to work with the United States Army Corps of Engineers ("USACE") to deepen and maintain the depth to 40 feet or more. Id. At the time IFG understood that the USACE might not permit such deepening and it expressed its desire to work with the Port to ensure that the dredging would take place. Doc. 341, att. 1, pp. 285-287 [P35].
The LOI provided that IFG would conduct a study by a licensed engineering firm to assure that its ship loader can be placed on Berth No. 8. Doc. 341, att. 1 p. 175 . The study, according to
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the LOI, must also include that the concrete pilings beneath Berth No. 8 are at a depth sufficient to withstand dredging to at least 40 feet. Id. Other issues addressed in the LOI but not necessarily pertinent to issues herein are railroad service to the Port and IFG's right of exclusivity pertaining to the export of grain at the Port.
The Lease, which incorporated some but not all conditions listed in the LOI, was ultimately executed by parties on August 15, 2011.
B. IFG Grain Terminal Facility
Under the lease IFG was to begin construction of its facility within twelve months of the effective date of the lease (August 15, 2011) and the facility was to be completed within twenty-four months of commencing construction. Doc. 341, att. 26, p. 168, § 6.3 [D49]. There were several extensions of the expected completion date and the IFG facility ultimately opened on July 15, 2015. Doc. 1, ¶ 8. This date, July 15, 2015, is referred to as the Rent Commencement Date under the Lease. Doc. 341, att. 26, p. 163 [D49]. Pursuant to Section 4 of the Lease, IFG was to begin paying rental payments, or Minimum Annual Guarantee ("MAG") throughput charges, beginning on the Rent Commencement Date in accordance with a schedule set forth in Exhibit 3 of the Lease. Id. at pp. 166-167, 203-204.
On July 31, 2016, the Port sent an invoice to IFG for $359,167.63 representing MAG charges for the first year of the lease. Doc. 341, att. 10, p. 61 [P285]. IFG contends that pursuant to the force majeure provisions of the Lease it is not obligated to pay these MAG charges. Doc. 236, pp. 18-23, ¶¶26-27. However, according to IFG, in order to mitigate damages, it paid the Port the amount invoiced plus interest under protest and sought reimbursement of this amount in its amended complaint. Doc. 341, att. 11, pp. 257-59 [P300]. On July 31, 2017, the Port sent another invoice to IFG in the amount of $44,958.03 representing MAG charges due for the second
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lease year. Doc. 341, att. 15, pp. 29-30 [P323]. Again IFG paid the amount due under protest and the parties, rather than file another amended pleading, entered into a stipulation providing that the court's determination regarding the MAG charges for the first year will be applied and handled in the same way for the second year MAG charges. Doc. 341, att. 15, pp. 87-91 [P325].
C. The Default Letter
After the Lease was executed, the parties' attention turned to preparations for dredging. The marine area alongside Berth No. 8 needed to be at least 42 feet in order for IFG to attract larger vessels and increase shipping traffic. The Port's 2004 maintenance dredging permit from the USACE only allowed dredging to a depth of 37 feet. Doc. 341, att. 24, p. 1-21 [D1]. Therefore, the permit needed to be amended. Section 8.9 of the Lease, which is the subject of much of this litigation, provides:
8.9 Dredging. [IFG] will arrange for and complete the initial dredging of the marine area alongside the Berth No. 8 Servitude Area and the vicinity connecting the Calcasieu ship channel to this area (see the map attached as Exhibit 6 which shows the specific areas to be dredged) to a depth of no less than forty-two (42') feet below the low water line as measured at mean low Gulf tide. [IFG] will only arrange for and complete this dredging one (1) time prior to the Expected Completion Date. To offset the cost of this initial dredging the [Port] will pay [IFG] one-half of the cost of this initial dredging up to a maximum payment of two hundred and fifty thousand dollars ($250,000). The [Port] will pay [IFG] this amount immediately upon completion of the dredging and [IFG] reasonably documenting the amount paid for such dredging work and upon [IFG] giving the [Port] an invoice from the contractor performing the dredging work. [IFG] or its contractor will deposit the spoil from the initial dredging, subject to the guidelines and requirements of the United States Corps of Engineers and all applicable laws, rules and regulations, at the [Port's] dredge spoil site that is closest in proximity to the area dredged and which is available for use. The [Port] will not assess or charge [IFG] any fee for use of the [Port's] disposal sites. After this initial dredging is complete, the [Port] will at its sole cost, arrange for and complete dredging of the areas indicated in Exhibit 6 for the entire Initial and Extended Terms of the Ground Lease to ensure that the depth is maintained at forty-two (42) feet and provide semi-annual surveys to [IFG] to show that the required depth is being maintained; provided, however, at any time the depth is forty-one (41) feet or less, the Port will promptly commence and diligently pursue the process to maintenance dredge to return
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the depth back to forty-two (42) feet within a reasonable time. After the initial dredging, all future dredging and surveys of the areas indicated in Exhibit 6 will be at no cost to [IFG].
Doc. 341, att. 26, p. 172, § 8.9 [D49].
The parties agree that IFG was to initially undertake the dredging of the area alongside Berth No. 8 with the Port reimbursing IFG one half of the cost up to $250,000....
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