St. Bernard Port, Harbor & Terminal Dist. v. Violet Dock Port Inc.

• Decision Date: 25 August 2011
• Docket Number: Civil Action No. 11–8.
• Citation: 809 F.Supp.2d 524
• Court: U.S. District Court — Eastern District of Louisiana
• Parties: ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT v. VIOLET DOCK PORT, INC., LLC.

809 F.Supp.2d 524

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

v.VIOLET DOCK PORT, INC., LLC.

Civil Action No. 11–8.

United States District Court, E.D. Louisiana.

Aug. 25, 2011.

James M. Garner, Ashley Gremillion Coker, Chad P. Morrow, Elwood F. Cahill, Jr., Sher, Garner, Cahill, Richter, Klein & Hilbert, LLC, New Orleans, LA, for St. Bernard Port, Harbor & Terminal District.

Randall A. Smith, J. Geoffrey Ormsby, Laura Hawkins Davis, Smith & Fawer, LLP, New Orleans, LA, for Violet Dock Port, Inc., LLC.

ORDER AND REASONS

SARAH S. VANCE, District Judge.

Before the Court is St. Bernard Port, Harbor & Terminal District's motion to remand.¹ Because Violet Dock Port has not asserted a valid basis for this Court's jurisdiction, St. Bernard Port's motion is GRANTED.

I. BACKGROUND

This case involves the expropriation by St. Bernard Port of about 70 acres of riverfront property in St. Bernard Parish. The property is located six miles from St. Bernard Port's existing facility, and it is owned by Violet. St. Bernard Port is a public corporation and a political subdivision created by the State of Louisiana to regulate all domestic, coastwise, and intercoastal commerce and traffic in St. Bernard Parish.² La.Rev.Stat. §§ 34:1701; 34:1703(A). Violet is a Louisiana limited liability company. ³

Since 1984, Violet has used a portion of the property at issue to provide layberths to United States military vessels under contracts between Violet and the United States Navy, Military Sealift Command (MSC). According to Donald Dieudonne, Violet's General Manager for Operations, those contracts have “explicit wharf construction specifications, mooring specifications, pier specifications, other security and service requirements, all of which are strictly enforced by the United States.” ⁴ Under the current contract, executed on March 20, 2009, Violet agreed to provide layberthing services to MSC for two U.S. Navy Large, Medium–Speed, Roll–On/Off (LMSR) ships. The primary mission of the ships is “to provide lift capacity for unit equipment (vehicles and rotary wing aircraft) to support Army divisions or other units.” ⁵ The contract provides for an initial fixed period of performance until September 30, 2009, and then nine one-year periods in which MSC has the option to extend the contract.⁶ On January 12, 2011, MSC issued a Modification to the contract, which included, inter alia, a replacement of FAR 52.211–15 (Sep. 1990) with FAR 52.211–15 (Apr. 2008). FAR 52.211–15 (Apr.2008) provides: “This is a rated order certified for national defense, emergency preparedness, and energy program use, and the Contractor shall follow all the requirements of the Defense Priorities and Allocation System regulation (15 CFR 700).” ⁷ The contract also incorporates by reference clauses from the Code of Federal Regulations that permit MSC to terminate either for convenience ⁸ or in the event that Violet fails to perform.⁹

Before expropriating the property, St. Bernard Port attempted to obtain it through a consensual purchase, as required by Louisiana law. See La.Rev.Stat. § 19:2.2 (“Before exercising the rights of expropriation provided for in R.S. 19:2, the state or its political corporations or subdivisions shall ... (2) Offer to compensate the owner an amount equal to at least the lowest appraisal or evaluation.”). On January 10, 2007, St. Bernard Port offered $10 million, the amount at which the property was initially appraised.¹⁰ Violet informed St. Bernard Port on April 17, 2007 that its stockholders had rejected that offer. ¹¹ After more negotiations and a second appraisal, St. Bernard Port offered to purchase the property for $16 million on September 7, 2010. Violet rejected that offer as well.

On September 30, 2010, the Board of Commissioners of St. Bernard Port passed a resolution to expropriate Violet's property under La.Rev.Stat 19:2.1 and 19:12.¹² In that resolution, the Board provided the following statement of purpose:

St. Bernard Parish continues to recover from the devastating hurricanes that have struck our coast since 2005, one area of the economy that has been in the forefront of economic growth and development is the port industry. In the St. Bernard Parish Economic Recovery Model, the Port is one of the basic industries of the Parish. Basic industries are the foundation of a region's economy because their goods and services are exported (i.e., sold to people outside of the region) and, therefore, bring revenues into the community. Commerce through the Port of St. Bernard represented 24% of the Interim Recovery Plan, the citizens of St. Bernard Parish identified the development of the Violet Site as one of their highest economic development priorities: The acquisition and development of the Violet Terminal would be the logical downriver extension of port services in St. Bernard Parish. The Citizen's Recovery Committee recommended that Parish and/or State roads be extended to directly access the Violet Site, recognizing the need for projects to energize the Parish's recovery. The project is basically a port expansion project accomplished by acquiring property and assets on the Mississippi River. The Port would acquire three heavy duty docks and over 4,200 linear feet of river frontage that would be available for immediate use. The 38 acres of uplands are largely undeveloped for cargo storage, but with a minimal investment could be prepared as valuable lay-down area for commodities and project cargoes[.] ¹³

The Board further resolved that the property would be for “predominate use by the public and shall not be for predominant use by, or for transfer of ownership to, any private person or entity.” ¹⁴

In a letter dated November 2, 2010, MSC wrote to Violet, stating that “[i]t has come to the Government's attention that there may be an issue with Violet's ability to continue to provide layberth services under the subject contract.” ¹⁵ The letter further stated that, under Section H–10, “this is a performance based contract,” and “[t]he Contractor is required to provide, operate, and maintain a safe berth for the firm and all options periods (if exercised).” ¹⁶ MSC requested that Violet respond in writing if Violet would be unable to perform under the contract, including “facts of the situation, potential impact to the subject contract, and a timeline of events.” ¹⁷

St. Bernard Port filed a petition for expropriation in the 34th Judicial District Court for St. Bernard Parish on December 22, 2010 ¹⁸ and deposited $16 million in that court's registry as estimated just compensation for the expropriation.¹⁹ According to the petition and the affidavit of Robert Schafidel, St. Bernard Port's executive director, the purpose of the expropriation is for the construction of a bulk terminal facility capable of accommodating both liquid-bulk and dry-bulk commodities. ²⁰ Schafidel states that the construction of the bulk terminal is planned to occur in three phases and will take about eight to ten years to complete: “Phase I will include the acquisition of the Violet Dock Port site and the completion of certain short-term improvements on the site to make the existing facilities useful for stevedoring activities.” ²¹ “Phase II consists of constructing a dry bulk storage facility, rail access, truck access, queuing and weighing facility, conveyor systems, and other dock improvements.” ²² And “Phase III consists of the development of a liquid bulk tank farm, rail access and storage facilities, a pipe network, and other dock improvements.” ²³ The petition also states that the expropriation is intended “to create jobs and benefits to the citizens of St. Bernard Parish” and that St. Bernard Port intends to “enter into a new contract with Military Sealift Command for its continued use of the Violet Port during Phase I of the acquisition and development of the Violet Dock Port.” ²⁴

On December 29, 2010, MSC sent a letter to St. Bernard Port explaining that it had received notice that the subject property had been expropriated and that St. Bernard Port intended “to take over the subject contract.” ²⁵ In light of the expropriation, MSC requested (1) a point of contact at St. Bernard Port, (2) a proposed timeline for transferring the subject contract “should this contract be novated,” and (3) “confirmation that the Port intends to accept the same terms and conditions of the subject contract,” “should this contract be novated.” ²⁶ St. Bernard Port responded on January 5, 2011, providing a point of contact, stating that “St. Bernard Port stands ready to immediately assume the referenced contract, subject to the current court proceedings concerning the expropriation,” and confirming that it intends to accept the terms and conditions of Violet's contract with the MSC.²⁷

Violet removed the matter to this Court on January 3, 2011 ²⁸ and moved to dismiss St. Bernard Port's expropriation.²⁹ St. Bernard Port then filed the instant motion to remand on January 11, 2011.³⁰ The Court heard oral argument on the remand motion and determined that it would be informative to have MSC take a position on whether the expropriation would interrupt or otherwise adversely affect the services for which it has contracted. On the Court's order,³¹ MSC submitted a letter on March 17, 2011.³² MSC stated: “While the expropriation of Violet's property has the potential to affect its ability to perform under the terms of the contract, since the Navy has no real property interest affected by the District's expropriation, it currently believes that the expropriation does not affect the Government's contractual rights and remedies.” ³³ MSC also stated that “[t]he proposed expropriation could adversely affect the services provided the Navy under the subject contract in the future....” ³⁴ It explained that, because Violet maintains that it will not seek to novate the contract, “there is some uncertainty regarding future contract performance.” ³⁵ On July 27, 2011, MSC sent an...