Ormet Primary Aluminum Corp. v. Ballast Technologies, Inc.

Case: 10-30710 Document: 00511508092 Page: 1 Date Filed: 06/14/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 14, 2011
No. 10-30710 Lyle W. Cayce
Clerk
Ormet Primary Aluminum Corporation
Plaintiff-Appellee/Cross-Appellant
v.
Ballast Technologies, Inc.
Defendant-Appellant/Cross-Appellee
Appeals from the United States District Court
for the Eastern District of Louisiana
(09-CV-6726)
Before WIENER, BENAVIDES, and STEWART, Circuit Judges.
PER CURIAM:*
Plaintiff-Appellee/Cross-Appellant Ormet Primary Aluminum (“Ormet”)
sued Defendant-Appellant Ballast Technologies (“Ballast”) for unpaid storage
services at Ormet’s bulk marine terminal. Ormet also sought attorneys’ fees
under the Louisiana Open Account Statute.1 Ballast countered that Ormet’s
claim was a compulsory counterclaim in a previous proceeding involving Ormet,
Ballast, and a third party, Universal Minerals. Ballast reasoned that Ormet had
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
1
LA . REV . STAT . ANN . § 9:2781.
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waived any right to unpaid fees for storage services by failing to make that claim
in the earlier proceeding. The district court disagreed with Ballast, concluding
that Ormet’s claim was not a compulsory counterclaim, and granted Ormet’s
motion for summary judgment. The district court nevertheless held that Ormet
was not entitled to attorneys’ fees. We agree with the district court that Ormet’s
claim was not a compulsory counterclaim in the previous proceeding and affirm
its grant of summary judgment in favor of Ormet. Disagreeing with the district
court’s determination that Ormet was not entitled to attorneys’ fees, however,
we reverse that holding and remand for further proceedings consistent herewith.
I. FACTS & PROCEEDINGS
A. Facts
Ormet owns and operates Burnside Terminal, a bulk marine facility
located on the Mississippi River in Louisiana. Ormet provides stevedoring and
storage services at the Burnside Terminal. Starting in 2004, Ballast delivered
cargo to the Burnside terminal for storage on a number of occasions.
In 2005 Ormet entered into a written contract with Universal Minerals to
provide stevedoring services for the cargo on Universal Minerals’s vessels. Early
the following year, a ship chartered and operated by Universal Minerals, the
M/V Biloxi Belle, discharged magnetite ore owned by Ballast for storage at
Ormet’s Burnside Terminal. A few months later, additional magnetite ore
owned by Ballast was stored at Ormet’s terminal. Ballast failed to pay storage
fees for either of those shipments from October 1, 2007 to January 8, 2008.
Beginning in January 2008, Ormet made repeated attempts to collect the
outstanding fees from Ballast, culminating in a final demand for payment by
certified mail made in July 2009. Ormet calculated that Ballast had
accumulated $145,290.77 in storage fees on its account by that time. In response
to the final demand, Ballast offered a check for $10,919.92 marked “in full
2
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payment of all outstanding handling, discharge and/or storage charge balances.”
Ormet refused to accept this payment.
In the meantime, a controversy had arisen regarding the docking of the
Biloxi Belle. In 2006, when that ship approached the Burnside Terminal, it was
forced to wait while another ship was loaded. The terminal’s conveyor system
was damaged during the loading of the other ship, disrupting the normal
schedule of discharge and loading at the terminal. As a result, the Biloxi Belle
had to wait for almost a month before its cargo could be unloaded. The delay
caused Universal Minerals, the charterer of the vessel, to incur demurrage under
the terms of its charter agreement with the ship’s owners.
B. Proceedings
The owners of the Biloxi Belle instituted arbitration proceedings against
Universal Minerals to recover the demurrage. Neither Ballast nor Ormet were
parties to this arbitration, and Universal Minerals was solely responsible,
including the portion of the arbitration award for the demurrage owed, interest
thereon, the costs of arbitration, and the vessel owners’ attorneys’ fees.
Universal Minerals then invoked admiralty jurisdiction and filed suit against
Ormet in federal district court, seeking damages for the demurrage charges,
interest on those charges, attorneys’ fees incurred by the owners of the ship,
arbitration fees, Universal Minerals’s attorneys’ fees incurred at the demurrage
arbitration, and demurrage on ten barges chartered by Universal Minerals. All
of these damages were for costs incurred solely by Universal Minerals and none
by Ballast. Ballast was joined as a plaintiff in this suit, which ultimately settled
before going to trial. The settlement agreement among the three parties did not
require Ormet to release or waive any rights against Ballast.
After the underlying case settled and Ormet’s repeated demands for
payment of storage fees from Ballast went unheeded, Ormet sued Ballast in
3
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district court. Ballast did not contest that Ormet provided the services invoiced,
contending instead that Ormet’s failure to plead this claim as a counterclaim in
the previous suit barred Ormet from suing Ballast on that claim in the instant
action. The district court disagreed and granted Ormet’s motion for summary
judgment, but the court denied Ormet’s claim for attorneys’ fees. Ballast timely
filed a notice of appeal, after which Ormet filed a notice of cross-appeal.
II. STANDARD OF REVIEW
We review a district court’s summary judgment de novo.2 Summary
judgment is appropriate only when there exists no genuine issue of material fact
and the movant is entitled to judgment as a matter of law.3
III. ANALYSIS
A. Compulsory Counterclaim
We agree with the district court that Ormet’s claim against Ballast for the
unpaid storage services was not a compulsory counterclaim in the initial lawsuit
involving Universal Minerals. Therefore, Ormet was not required to assert that
claim in the first suit and was free to bring it against Ballast in the instant suit.
We apply the “logical relation” test to determine whether a counterclaim
was compulsory.4 There is a logical relationship between a potential
counterclaim and the principal claim when “the same operative facts serves as
the basis of both claims or the aggregate core of facts upon which the claim rests
2
In re Am. River Transp. Co., 490 F.3d 351, 353 (5th Cir. 2007) (citing Holmes v. Atl.
Sounding Co., 437 F.3d 441, 445 (5th Cir. 2006)); Thurman v. Sears, Roebuck & Co., 952 F.2d
128, 131 (5th Cir. 1992).
3
FED . R. CIV . P. 56(a).
4
Plant v. Blazer Fin. Servs., Inc. of Ga. 598 F.2d 1357, 1361 (5th Cir. 1979) (citations
omitted).
4
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activates additional legal rights, otherwise dormant, in the defendant.”5 Ballast
contends that its 2007 contract with Ormet was based largely on the 2005
contract between Ormet and Universal Minerals, on which the previous trial was
grounded. Even if this assertion were true, other courts have noted that, alone,
such a contractual relationship is not sufficient to make a counterclaim
compulsory.6 Furthermore, the two claims at issue here arise from different sets
of operative facts: The prior case arose out of the botched docking and unloading
of the Biloxi Belle; this case arose out of Ballast’s failure to pay for storage
services provided by Ormet. The fact that the cargo stored at the Burnside
Terminal traveled there on the Biloxi Belle is irrelevant to the instant case.
Ballast also contends that Ormet’s attorney, Richard Foster, conceded
during the settlement negotiations of the previous case that Ormet’s claims
against Ballast would have been compulsory and that Ballast relied on that
concession. Ballast’s contention is incorrect: Ormet did not concede that its
claims were compulsory counterclaims, either through Foster or anyone else.
The settlement agreement between Ormet, Ballast, and Universal Minerals does
not contain any release language pertaining to Ormet’s claims, even though it
does contain such language regarding Ballast and Universal Minerals’s claims.
Furthermore, although Foster wrote in an email to Ballast’s counsel that any
claims by Ormet against Ballast “would have been compulsory if [any] existed[,]”
he immediately followed up with another email less than two hours later
clarifying that Ormet did have claims against Ballast and that he did not
consider these claims to be compulsory counterclaims.
5
Id. (citation omitted).
6
See, e.g., Plymouth Yongle Tape (Shanghai) Co. v. Plymouth Rubber Co., 683 F. Supp.
2d 102, 110 (D. Mass 2009); Cont’l Fed. Sav. & Loan Ass’n v. Delta Corp. of Am., 71 F.R.D. 697,
701 (W.D. Okla. 1976).
5
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Because the underlying facts of the two claims are largely unrelated, and
Ormet did not concede that its counterclaims were compulsory, the district court
correctly ruled that Ormet’s claims were not compulsory and therefore could be
brought in the instant case. Largely for the reasons expressed by the district
court, we affirm its grant of summary judgment in favor of Ormet.
B. Attorneys’ Fees
We conclude, however, that the district court erred when it denied
attorneys fees to Ormet. When, under the Louisiana Open Account Statute, (1)
the account debtor fails to pay the outstanding balance on such an account
within thirty days after the account creditor sends a written demand for the
amount owed, and (2) a judgment on that claim is thereafter rendered in favor
of that creditor, it is entitled to reasonable attorneys’ fees.7 In this case, Ormet
complied with those statutory requirements: It sent Ballast a certified letter in
July 2009 requesting full payment of $145,290.77 and, when payment was not
forthcoming, Ormet sued and obtained a judgment against Ballast for that
precise amount. The only remaining question is whether the dealings between
Ormet and Ballast constituted an open account.8
The Louisiana Supreme Court has cautioned that the Open Account
Statute must be construed “strictly [] because the award of attorney fees is
exceptional and penal in nature.”9 The relevant Louisiana statute defines an
7
LA . REV . STAT . ANN . § 9:2781(A).
8
See Jacobs v. Loeffelholz, 647 So. 2d 1282, 1284 (La. Ct. App. 1994) (“The evidence
adduced at trial supports a finding that the plaintiff scrupulously complied with the technical
requirements of LA . REV . STAT . § 9:2781 in that he sent a proper demand letter and secured
a judgment for the exact amount specified in his demand. Thus, if the agreement constitutes
an open account, the plaintiff is entitled to an award of attorneys fees for securing a favorable
judgment.” (citing Scarborough v. Nelson, 371 So. 2d 1261 (La. Ct. App. 1979))).
9
Frank L. Beier Radio, Inc. v. Black Gold Marine, Inc., 449 So. 2d 1014, 1015-16 (La.
1984) (citations omitted).
6
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open account to “include any account for which a part or all of the balance is past
due, whether or not the account reflects one or more transactions and whether
or not at the time of contracting the parties excepted future transactions.” 10
Louisiana courts have defined an open account alternatively as “an account in
which a line of credit is running and is open to future modification because of
expectations of prospective business dealings.”11 And, the Louisiana Supreme
Court has noted that, “[u]nder a plain reading of that statute, there is no
requirement that there must be one or more transactions between the parties,
nor is there any requirement that the parties must anticipate future
transactions.” 12
In concluding that Ormet’s claim was not on an open account, the district
court relied heavily on Construction Testing Labs, Inc. v. Wal-Mart Stores, Inc.,13
in which the district court determined that “deferred payment of 30 days does
not establish an open account where . . . each transaction had definitive terms.” 14
The dealings between Ballast and Ormet in this case are distinguishable from
those between the parties in Construction Testing Labs, however. Ormet did not
merely defer the payment owed by Ballast; it also established an applicable
interest rate for the eventuality that Ballast would not pay within the required
period. A hallmark of an open account is that “[t]he total cost, unlike a contract,
is generally left open or undetermined, although the rate for specific services
10
LA . REV . STAT . ANN . § 9:2781(D).
11
Tyler v. Haynes, 760 So. 2d 559, 563 (La. Ct. App. 2000).
12
Frey Plumbing Co. v. Foster, 996 So. 2d 969, 972 (La. 2008).
13
No. 08-0569, 2009 WL 2214678 (W.D. La. July 23, 2009).
14
Id. at *3 (citing Cambridge Toxicology Grp., Inc. v. Exnicios, 495 F.3d 169, 174 (5th
Cir. 2007)).
7
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may be fixed, such as an hourly rate.”15 The account in question here was left
open or undetermined because the total amount depended on how long Ballast
should delay payment to Ormet and how much interest would accrue.
As the obligation in question constituted an open account because of its
undetermined total, and as Ormet has complied with all requirements of the
Louisiana Open Accounts Statute, it is entitled to attorneys’ fees.
IV. CONCLUSION
The claim brought by Ormet in the instant case was not a compulsory
counterclaim in the previous case involving Ormet, Ballast, and Universal
Minerals. Summary judgment in favor of Ormet was therefore appropriate and
is AFFIRMED. Ormet is also entitled to attorneys’ fees, however, because it has
satisfied all applicable requirements under Louisiana’s open accounts law. We
REVERSE on this issue and REMAND for the district court to calculate
attorneys’ fees based on the Louisiana Open Account Statute and to amend and
re-enter its summary judgment accordingly.
AFFIRMED in part; REVERSED and REMANDED in part.
15
Mid-S. Analytical Labs, Inc. v. Jones, Odom, Spruill & Davis, LLP, 912 So. 2d 101,
107 (La. Ct. App. 2005).
8