Opinion
Civil Action No: 97-775, c/w 97-803, c/w 98-2200
August 22, 2000
ORDER AND REASONS
Before the Court is defendant West Coast Liquidators, Inc.'s motion for summary judgment under Federal Rule of Civil Procedure 56 to dismiss the cross-claims and counterclaim of the City of New Orleans. Also before the Court is the City's third motion or summary judgment, which argues that if the Court grants WCL's motion, the Court should dismiss plaintiffs' action against the City. For the following reasons, WCL's motion is granted in part, and the City's motion is denied.
I. Background
The City of New Orleans offered WCL a vacant lot rent free for 12 years as an inducement to construct a large distribution center. The City and WCL also negotiated a fixed annual payment of $500,000 per year in lieu of taxes. In order to effect this lower property tax, the City transferred its ownership in the land to the Industrial Development Board of the City of New Orleans ("IDB"), which then leased it to WCL. After the execution of the lease, WCL entered into a building contract with Broadmoor Corporation to construct the warehouse. The IDB, however, owned the warehouse. As a third economic incentive, the City paid $5,000,000 toward the construction of the facility, $3,000,000 of which WCL was to repay over 15 years.
As part of the lease, the parties agreed to the following waiver of subrogation provision:
The parties hereto waive any subrogation rights that they have or may have against any other party, and all parties hereto agree that none shall claim, maintain or prosecute any action or suit against another for any loss, cost or damage caused by or resulting from fire or other risk or casualty on the Project for which any party is insured pursuant to the terms of this Lease.
(Lease Agreement § 16.4.)
On March 21, 1996 a fire ravaged the warehouse and the merchandise stored there. Plaintiffs ("Lloyd's"), who had insured WCL's merchandise, paid WCL. WCL granted subrogation rights to Lloyd's, and Lloyd's then instituted this lawsuit against the City and others. The City then filed a counterclaim and a cross-claim against WCL, alleging that the City and WCL had agreed not to sue one another and that WCL was negligent.
In response, WCL filed a motion for summary judgment seeking to dismiss the City's counterclaim and cross-claims. WCL argues that the City cannot sue it for two reasons. First, under the doctrine of confusion, WCL cannot be both an obligee and an obligor of the same obligation. Therefore, WCL's liability to the City is canceled regardless of WCL's fault. And second, the City and WCL had agreed not to sue each another.
Two parties responded to WCL's motion — Lloyd's and the City. Lloyd's characterizes the City's pleadings as claims for tort indemnification or contribution and then dismisses them as unnecessary because any fault assessed to WCL will reduce Lloyd's recovery. The City responded with a third motion for summary judgment, asserting that if the Court grants WCL's motion for summary judgment, then the Court should also dismiss Lloyd's action against the City.
II. Discussion
A. Summary Judgment Standard
Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See FED. R. Civ. P. 56(c). See also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552 (1986). Accordingly, a court must be satisfied that no reasonable trier of fact could find for the nonmoving party. In other words, "if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the nonmoving party to carry its burden." Beck v. Texas State Bd. of Dental Exam'rs, 204 F.3d 629, 633 (5th Cir. 2000)
Initially, the moving party bears the burden of establishing that there are no genuine issues of material fact. If the dispositive issue is one for which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record contains insufficient proof concerning an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325, 106 S.Ct. at 2554; see also Lavespere, 910 F.2d at 178. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Summary judgment is mandated if the nonmovant fails to make a showing sufficient to establish the existence of an element essential to her case on which she bears the burden of proof at trial. See id. at 322, 106 S.Ct. at 2552. The nonmovant may not rest upon the pleadings but must identify specific facts that establish a genuine issue exists for trial.
See Id. at 325, 106 S.Ct. at 2553-54; Rushing v. Kansas City S. Ry. Co., 185 F.3d 496, 505 (5th Cir. 1999).
B. The Doctrine of Confusion
Under Louisiana law, "when the qualities of obligee and obligor are united in the same person, the obligation is extinguished by confusion." LA. C.C. art. 1903. "The fundamental concept is that an obligation ceases to exist when the qualities of debtor and creditor of the same obligation are joined in the same person. . . ." Bogalusa Community Med. Ctr. v. Batiste, 603 So.2d 183, 187 (La.App. 1st Cir. 1992) (quoting Comment, Extinguishment of Obligations by Confusion, 36 TUL L. REV. 521 (1962)). " (T]he obligation is extinguished irrespective of whether it is the creditor who subsequently acquires the debt or the debtor who subsequently acquires the credit. For confusion to occur the same person must acquire the full and perfect ownership of both sides of the obligation . . . Langley v. Police Jury of Parish of Calcasieu, 201 So.2d 300, 305 (La.App. 3d Cir. 1967) (en banc). Moreover, Louisiana jurisprudence "does not recognize the concept of partial extinguishment of an obligation by incomplete confusion of a principal obligation." Bogalusa Community Med. Ctr., 603 So.2d at 187 (citing Dept. of Culture v. Fort Macomb Dev., 385 So.2d 1233 (La.App. 4th Cir. 1980) and Langley, 201 So.2d at 300).
1. Confusion of Delictual Causes of Action
As a threshold matter, plaintiffs suggest that the doctrine of confusion is a contractual concept that cannot extinguish a delictual cause of action. In support of that contention, they say that their "research has found no instance in the case law under Articles 1903 through 1906 that applies confusion to Article 2315 causes of action." (Mem. Opp'n City's Third Mot. Summ. J. at 2.) The Court disagrees. The text of Article 1903 does not limit the doctrine of confusion to contracts. Moreover, in Adams v. Hartford Accident Indem. Co.., 142 So.2d 535 (La.App. 4th Cir. 1962), for example, the plaintiff's rights arose under Article 2315, yet the court concluded that confusion "extinguished the obligation and terminated the cause of action." Adams, 142 So.2d at 536 (analyzing Dumas v. United States Fidelity Guar. Co., 134 So.2d 45 (La. 1961) and Addison v. Employers Mut. Liability Ins. Co. of Wis., 64 So.2d 484 (La.App. 1st Cir. 1953)). Furthermore, plaintiffs fail to cite, and this Court is unable to find, any state court opinions limiting the doctrine of confusion to contractual obligations. Therefore, the Court will consider the merits of WCL's and the City's motions.
2.WCL
WCL asserts that the City's claims against it are extinguished by the doctrine of confusion. Specifically, WCL argues that the City's claims would require WCL to repay the very insurance money that it had received.
WCL's argument, however, fails to satisfy the confusion doctrine's requirement that it acquire the full and perfect ownership of both sides of the same obligation. Here, Lloyd's paid WCL for merchandise destroyed in the fire. Lloyd's then sued the City in tort asserting that the City is liable for the actions of its Fire Department employees who caused or contributed to the losses. The City, in turn, sued WCL, asserting negligence. The City's tort indemnification claim seeks recovery based on WCL's own negligence, a separate obligation from the City's obligation not to cause the fire. Both the City and WCL could have contributed to the fire by breaching these separate obligations. That WCL had a duty not to be negligent and that others owed it a separate duty not to be grossly negligent does not dispel WCL's obligation by confusion. Thus, the doctrine of confusion has no application here.
The City's tort indemnification claim is defective for another reason, however. Under Louisiana's fault apportionment rules, the City would not be held liable for any fault beyond its own; therefore, a tort indemnity claim cannot arise. See La. Civ. Code art. 2323 (West 2000); Osgood v. Branam Enterprises, 2000 WL 622608 (E.D. La. May 12, 2000). The City's claim for tort indemnity based on the negligence of WCL is therefore dismissed.
3. The City
In the City's motion for summary judgment against Lloyd's, it argues that if WCL prevails in its motion for summary judgment, then plaintiffs' action against the City should likewise be dismissed. Because the Court has denied WCL's motion, this motion must likewise be denied.
C. The Agreement Not to Sue One Another
Alternatively, WCL argues that in Article 16.4 of the Lease, the City and WCL agreed not to sue one another for any loss "for which any party is insured pursuant to the terms of this Lease." (Mem. West Coast Liquidators, Inc. Supp. Mot. Summ. J. at 9.) WCL also acknowledges, however, this Court's ruling that "whether or not the inventory insurance was required under the Lease was not one that could be decided by Summary Judgment." (Id. at 9-10.) Accordingly, as the question of whether the lease required the inventory insurance remains open, the Court cannot conclude at this juncture that the City cannot sue WCL to enforce the provisions of the lease. The Court, therefore, denies WCL's alternative ground for summary judgment.
III. Conclusion
For the foregoing reasons, both WCL's and the City's motions for summary judgment are denied, except that the Court grants summary judgment in favor of WCL on the City's claim for tort indemnity.