Ts & C Investments, L.L.C. v. Beusa Energy, Inc.

• Decision Date: 02 February 2009
• Docket Number: Civil Action No. 07-2103.
• Citation: 637 F.Supp.2d 370
• Parties: TS & C INVESTMENTS, L.L.C., et al. v. BEUSA ENERGY, INC., et al.
• Court: U.S. District Court — Western District of Louisiana

637 F.Supp.2d 370

TS & C INVESTMENTS, L.L.C., et al. v. BEUSA ENERGY, INC., et al.

Civil Action No. 07-2103.

United States District Court, W.D. Louisiana, Lafayette Division.

February 2, 2009.

Scott R. Bickford, Lawrence J. Centola, III, Martzell & Bickford, New Orleans, LA, Alexandre Jean-Claude Cenac, Phoenix, AZ, Bart J. Hebert, Mark David Boyer, Boyer & Hebert (BB), Breaux Bridge, LA, Christi R. Hemphill, Mickey Remy Mason, Randy Paul Angelle, Bernard & Angelle, Lafayette, LA, for TS & C Investments, LLC, Crawfish Town USA Inc., MBLLC, Tiger Truck Stop Inc., Myers Family Enterprises LLC, S & J Minimart LLC, Atchafalaya Enterprises Ltd. Parkes Hospitality LLC, Pyramids Foods Inc., Cajun Towing & Recovery Inc.

Francis X. Neuner, Jr., Ben L. Mayeaux, Brandon Wade Letulier, Kevin P. Merchant, Louis Simon, II, Laborde & Neuner, Lafayette, LA, Allison T. Beckham, Akin Gump et al., Gregory V. Brown, Jackson Walker, Houston, TX, for Beusa Energy, Inc.

Marc D. Moroux, Mahtook & Lafleur, Lafayette, LA, for Justiss Oil Co. Inc.

Edwin G. Preis, Jr., Michael Benjamin Alexander, Robert M. Kallam, Preis & Roy, Lafayette, LA, for Alliance Drilling Consultants LLC.

MEMORANDUM RULING

REBECCA F. DOHERTY, District Judge.

Pending before this Court are three Reports and Recommendation issued by the magistrate judge, in which the magistrate judge recommends the following motions be granted and that all claims against all defendants be dismissed with prejudice: (1) "Motion to Dismiss With Prejudice for Failure to State a Claim" filed by defendant Beusa Energy, Inc. ("Beusa") [Doc. 58]; (2) "Rule 12(b)(6) Motion to Dismiss For Failure to State a Claim on Which Relief Can Be Granted" filed by defendant Justiss Oil Company [Doc. 59]; and (3) "Rule 12(b)(6) Motion to Dismiss" filed by defendant Alliance Drilling Consultants, L.L.C.P. (Doc. 60).¹ Defendants seek the dismissal of all claims filed by plaintiffs against them for economic damages pursuant to Louisiana tort law and Article 667 of the Louisiana Civil Code following the closure of Interstate 10 after an oil well blowout in November 2007 in Iberville Parish near Interstate 10.

Plaintiffs filed objections to the Reports and Recommendation [Doc. 92], and all three defendants filed responses to the plaintiffs' objections [Docs. 93, 94, & 95]. For the following reasons, this Court AFFIRMS the findings of the magistrate judge, GRANTS the motions to dismiss, and DISMISSES WITH PREJUDICE all of plaintiffs' claims against all defendants named herein.

I. Factual Background

The factual and procedural background of this matter is set forth by the magistrate judge in his Report and Recommendation and will not be re-stated here, and in support of its Ruling this date, this Court adopts the Report and Recommendation of the magistrate judge in toto. For the sake of brevity and clarity, however, this Court notes the instant lawsuit is a putative class action lawsuit brought by several nominal plaintiffs, on behalf of themselves and all persons similarly situated, for damages allegedly sustained as a result of an oil well blowout in November 2007 in Iberville Parish near Interstate 10.² The plaintiffs assert claims for damages for loss of business, loss of economic opportunity, nuisance, and mental anguish. The magistrate judge found, and no party disputes, all categories of damages sought by plaintiffs are purely economic damages.

Although it has been framed in various ways by the parties, the principal issue before this Court is whether, under applicable law—all parties agree this Court is Erie-bound and Louisiana tort law applies—the "economic loss rule" barring recovery for negligent acts where there is no contractual relationship between the parties and there has been no physical damage to the plaintiffs or their property is applicable. Additionally, before this Court is the question of whether plaintiffs have a claim pursuant to Article 667 of the Louisiana Civil Code.³ On October 28 and 29, 2008, the magistrate judge issued three Reports and Recommendation, wherein the magistrate judge concluded plaintiffs fail to state a claim under Louisiana tort law and Article 667 of the Louisiana Civil Code and, accordingly, plaintiffs' claims against all three defendants should be denied and dismissed with prejudice [Docs. 89, 90 & 91], all as more fully discussed below.

II. Legal Analysis

A. Standard on Rule 12(b)(6) Motion to Dismiss

The magistrate judge correctly noted the standard to be applied to defendants' motions to dismiss. In deciding a Rule 12(b)(6) motion to dismiss, the court "accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff." Guidry v. American Public Life Ins. Co., 512 F.3d 177, 180 (5th Cir.2007), citing In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir.2007), cert. denied, ___ U.S. ___, 128 S.Ct. 1230, 170 L.Ed.2d 63 (2008) and ___ U.S. ___, 128 S.Ct. 1231, 170 L.Ed.2d 63 (2008). The plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Id.; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Twombly, 127 S.Ct. at 1965 (citation and footnote omitted).

In resolving a Rule 12(b) motion, the court is generally limited to considering only those allegations appearing on the face of the complaint. Cyrio v. Hunt, 2007 WL 2772222 at *4 (E.D.La. Sept. 19, 2007). However, matters of public record, orders, items appearing in the record of the case and exhibits attached to the complaint may be taken into account. Id., citing Chester County Intermediate Unit v. Pennsylvania Blue Shield, 896 F.2d 808, 812 (3rd Cir.1990). "Documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiffs complaint and are central to [the] claim." Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir.2004), citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir.2000).

B. Determining Louisiana Law Under Erie

No party disputes this case is governed by the Erie doctrine.⁴ In the Erie context, in order to determine state law, federal courts look to final decisions of the highest court of the state. When there is no ruling by the state's highest court, it is the duty of the federal court to determine as best it can, what the highest court of the state would decide. Transcontinental Gas Pipe Line Corp. v. Transportation Ins. Co., 953 F.2d 985, 988 (5th Cir.1992). When faced with an unsettled question of substantive state law in a diversity case, a federal court must make an "Erie-guess" as to how the state's highest court would answer the question. See, e.g., Martin K. Eby Const. Co., Inc. v. Dallas Area Rapid Transit, 369 F.3d 464, 468 (5th Cir.2004), citing Mayo v. Hartford Life Ins. Co., 354 F.3d 400, 406 (5th Cir.2004). Where the state's highest court has not yet spoken on an issue, the federal district court may look to the state's appellate courts for guidance. American Nat. General Ins. Co. v. Ryan, 274 F.3d 319, 328 (5th Cir. 2001), citing West v. Am. Tel. & Tel. Co., 311 U.S. 223, 237, 61 S.Ct. 179, 183, 85 L.Ed. 139 (1940)(stating that a decision by an intermediate appellate state court should not be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise); Tex. Dep't of Hous. & Cmty. Affairs v. Verex Assurance, Inc., 68 F.3d 922, 928 (5th Cir.1995) (accord).

C. Economic Loss Rule

In the instant case, plaintiffs—business owners along Interstate 10 whose businesses were affected by the closure of Interstate 10 as a result of the oil well blowout near Iberville Parish—seek damages from the oil company defendants for their economic losses allegedly occasioned by the closure of the interstate.⁵ As the magistrate judge pointed out, the Louisiana Supreme Court has not answered the precise legal question before this Court— that is, whether the plaintiffs can recover purely economic damages when there is no physical damage or damage to property in which plaintiffs have a proprietary interest and where there is no contractual relationship between the parties—therefore, this Court must make an "Erie guess" as to how the Louisiana Supreme Court would answer this legal question.

The well-established general rule within common law tort, that a party may not recover for economic loss not associated with physical damages—commonly referred to as the "economic loss rule"—was first enunciated by the United States Supreme Court within the context of the general maritime law in Robins Dry Dock v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290 (1927).⁶ Both the Louisiana Supreme Court and the federal Fifth Circuit have adopted the Robins Dry Dock rule in the context of an unintentional maritime tort. See PPG Industries, Inc. v. Bean Dredging, 447 So.2d 1058, 1059 (La.1984) (in suit brought and decided under maritime law, court held dredging contractor who negligently damaged a natural gas pipeline was not liable for economic losses incurred by pipeline owner's contract customer who had to seek and obtain gas from another source pending repair; recovery was not permitted "for the policy reasons... stated in a duty-risk analysis") and State of La. ex rel. Guste v. M/V TESTBANK, 752 F.2d 1019, 1020 (5th Cir. 1985) (physical damage to proprietary interest is a prerequisite to recover for economic loss in cases of unintentional maritime tort). As the magistrate judge noted, the rule is found within the admiralty law, however the rule's purpose is to prevent limitless liability for negligence and the filing of lawsuits of a highly speculative nature. See Akron Corp. v. M/T Cantigny, 706 F.2d...