# F&M Mafco, Inc. v. Ocean Marine Contractors, LLC

> District Court, E.D. Louisiana · January 22, 2020

URL: https://www.frixlaw.com/law-library/cases/10185176

## Case

- **Court:** District Court, E.D. Louisiana
- **Decided:** January 22, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10185176

## How later opinions describe it (automated extraction)

- holding that the rights a subrogee obtained by paying a superior creditor extinguished upon termination of the superior creditor’s rights

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

F&M MAFCO, INC. CIVIL ACTION

v. NO. 18-5621

OCEAN MARINE CONTRACTORS, LLC, ET AL. SECTION “F”

ORDER AND REASONS
Before the Court are three motions: (1) ECapital’s motion for
summary judgment enforcing and recognizing its alleged security
rights in three industrial cranes; (2) F&M’s motion for summary
judgment dismissing ECapital’s claims; and (3) ECapital’s motion
for partial summary judgment precluding F&M from contending that
it bought one crane from Ocean Marine Rentals. For the reasons
that follow, ECapital’s motion for summary judgment enforcing and
recognizing its alleged security rights is GRANTED IN PART as to
the cranes bearing serial numbers 41322 and 41468 and DENIED IN
PART as to the crane bearing serial number 41608; F&M’s motion for
summary judgment is DENIED; and ECapital’s motion for partial
summary judgment is DENIED.
Background
At the heart of this security-rights dispute are three
industrial cranes perched atop a Terrebonne Parish bayou. Two

companies claim rights in the cranes: one as an innocent buyer,
the other as a secured creditor. The cross-motions before the Court
present the question whether the secured creditor’s claim defeats
the innocent buyer’s.
F&M provides heavy-rigging packages, cranes, on-site tooling,
and welding systems. Ocean Marine Contractors and Ocean Marine
Rentals are family-owned shipbuilding companies. F&M bought three
industrial cranes from the Ocean Marine entities, and ECapital
claims security rights in all of them.
The case begins with a debt. In 2010, Regions Bank extended

over $1 million in credit to Ocean Marine Contractors. As security,
Ocean Marine Contractors granted Regions an interest in certain
collateral, including “any and all of [Ocean Marine Contractor’s]
now owned and hereafter acquired equipment[.]” This commercial
security agreement contained continuing-security and cross-
collateralization provisions.
In 2015, F&M bought three industrial cranes from the Ocean
Marine entities. The parties agree that Ocean Marine Contractors
sold two of them; they dispute which entity sold the third —— the
crane bearing serial number 41608.1 The dispute is understandable.
The bill of sale for the third crane is printed on Ocean Marine
Rentals letterhead, but it describes the crane as an Ocean Marine
Contractors item.

As part of the sale, F&M leased two of the cranes back to
Ocean Marine Contractors. But Ocean Marine Contractors failed to
pay rent. So, F&M sued in Ohio state court. In its complaint, F&M
said that it bought all three cranes from “OMC, LLC,” shorthand
for Ocean Marine Contractors. Based on this allegation and others,
F&M obtained a default judgment against the Ocean Marine entities
for over $770,000, plus interest and costs. Satisfaction did not
follow; this suit did.

F&M sued the Ocean Marine entities in this Court to enforce
the Ohio judgment. The Court entered summary judgment in F&M’s
favor, found that F&M was entitled to recognition and enforcement
of the Ohio judgment, and entered a Federal Rule of Civil Procedure
54(b) partial final judgment so that F&M could “avail itself of
enforcement remedies.”
Enter ECapital. Following the Court’s entry of a partial final
judgment in F&M’s favor, ECapital sought (and later obtained) leave
to intervene to protect its alleged security rights in the cranes.

1 The parties refer to the crane bearing serial number 41608
as the “third crane,” and the Court does the same.
In its intervenor complaint, ECapital says it is the successor-
in-interest to Regions Bank’s rights under the commercial security
agreement with Ocean Marine Contractors. ECapital says those

security rights cover the cranes F&M bought from the Ocean Marine
entities. ECapital seeks recognition of its alleged security
rights and an order directing the cranes to be seized and sold.
In response, F&M counterclaimed against ECapital for (1)
“wrongful acts,” (2) conversion, and (3) violations of the
Louisiana Unfair and Deceptive Trade Practices Act (LUTPA), LA.
REV. STAT. § 51:1405.2 F&M says ECapital “wrongly seized” its cranes
and moved them from accessible land controlled by the Ocean Marine
entities to inaccessible land controlled by ECapital. F&M also
says the cranes have “suffered considerable damages due to neglect

and lack of maintenance” since ECapital seized them.
Now, ECapital and F&M cross-move for summary judgment on the
validity of ECapital’s security rights. ECapital moves, in the
alternative, for partial summary judgment precluding F&M from
contending that it bought the third crane from Ocean Marine
Rentals.

2 The Court dismissed F&M’s LUTPA treble-damages claim on
ECapital’s Rule 12(b)(6) motion. See Order and Reasons of July 23,
2019.
I.

Summary judgment is proper if the record discloses no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law. FED. R. CIV. P. 56(a). A dispute is
“genuine” if “the evidence is such that a reasonable jury could
return a verdict for the non-moving party.” Anderson v. Liberty
Lobby, 477 U.S. 242, 248 (1986). A fact is “material” if it “might
affect the outcome of the suit.” Id. at 248.
If the non-movant will bear the burden of proof at trial,
“the movant may merely point to an absence of evidence, thus
shifting to the non-movant the burden of demonstrating by competent

summary judgment proof that there is an issue of material fact
warranting trial.” In re La. Crawfish Producers, 852 F.3d 456, 462
(5th Cir. 2017) (citation omitted).
The Court emphasizes that the mere argued existence of a
factual dispute does not defeat an otherwise properly supported
motion. See Anderson, 477 U.S. at 248. Nor do “[u]nsubstantiated
assertions, improbable inferences, and unsupported speculation[.]”
Brown v. City of Houston, Tex., 337 F.3d 539, 541 (5th Cir. 2003).
Ultimately, to avoid summary judgment, the non-movant “must go
beyond the pleadings and come forward with specific facts

indicating a genuine issue for trial.” LeMaire v. La. Dep’t of
Transp. & Dev., 480 F.3d 383, 387 (5th Cir. 2007).
In deciding whether a fact issue exists, the Court views the
facts and draws all reasonable inferences in the light most
favorable to the non-movant. See Midwest Feeders, Inc. v. Bank of

Franklin, 886 F.3d 507, 513 (5th Cir. 2018). The Court “resolve[s]
factual controversies in favor of the nonmoving party,” but “only
where there is an actual controversy, that is, when both parties
have submitted evidence of contradictory facts.” Antoine v. First
Student, Inc., 713 F.3d 824, 830 (5th Cir. 2013) (citation
omitted).
On cross-motions for summary judgment, the Court views each
motion separately and asks, as to each, whether the movant has met
the Rule 56(a) standard. See Shaw Constructors v. ICF Kaiser
Engr’s, Inc., 395 F.3d 533, 538-39 (5th Cir. 2004) (citing 10A

Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, FEDERAL
PRACTICE AND PROCEDURE § 2720 (3d ed. 1998)).
II.

Jurisdiction is based on diversity, so the Court applies
Louisiana “substantive” law. See Boyett v. Redland Ins. Co., 741
F.3d 604, 607 (5th Cir. 2014) (citing Erie R.R. Co. v. Tompkins,
304 U.S. 64 (1938)). Because Louisiana choice-of-law rules are
“substantive,” the Court applies them here. See Weber v. PACT XPP
Tech., AG, 811 F.3d 758, 770 (5th Cir. 2016) (citing Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941)).
The first step under Louisiana choice-of-law rules is
determining whether the laws of two or more states conflict. Lonzo
v. Lonzo, 17-0549, p. 12 (La. App. 4 Cir. 11/15/17); 231 So. 3d

957, 966. If they do not, the Court applies forum law; if they do,
further analysis is required. See Am. Elec. Power Co. v. Affiliated
FM Ins. Co., 556 F.3d 282, 285 n.2 (5th Cir. 2009). The parties
here have not identified a conflict, and the Court has not found
one. Accordingly, the Court applies Louisiana substantive law and
turns to the cross-motions for summary judgment.

III.
In the first cross-motion, ECapital seeks summary judgment
recognizing and enforcing its alleged security interests in the
cranes. The Court considers the first and second cranes before
turning to the third.

A.
ECapital says it has enforceable security interests in the
first and second cranes. Whether it does turns on the secured-
transaction provisions of Louisiana’s Uniform Commercial Code. See
LA. REV. STAT. § 10:9-101. In Louisiana, a security interest is
enforceable against the debtor and third parties with respect to

the collateral if three requirements are met: (1) value has been
given, (2) the debtor has rights in the collateral or the power to
transfer rights in the collateral to a secured party, and (3) the
debtor has authenticated a security agreement that provides a
description of the collateral. LA. REV. STAT. § 10:9-203(b).

The first requirement is met here because ECapital’s
predecessor-in-interest, Regions Bank, “gave value” for the
security interests by loaning Ocean Marine Contractors over $1
million. The second requirement is also met: the Ocean Marine
Contractors bill of sale for the cranes establishes that Ocean
Marine Contractors had the “power to transfer rights” in them.3
The third requirement requires deeper analysis.
F&M contends that the third requirement is not met because
the cranes are not “collateral” in that they are inadequately

described in the security agreement. ECapital rejoins that the
agreement adequately describes the cranes as collateral by
reference to categories such as “equipment.” The Court agrees.
The commercial security agreement defines “collateral” to
include “any and all of [Ocean Marine Contractor’s] now owned and
hereafter acquired equipment, machinery, furniture, furnishings

3 F&M contends that ECapital fails to show that Ocean Marine
Contractor owned any of the cranes. But “ownership” is not the
relevant legal standard. ECapital need only show that Ocean Marine
Contractors “ha[d] rights in the collateral or the power to
transfer rights in the collateral to a secured party.” LA. REV.
STAT. § 10:9-203(b).
and fixtures of every type and description[.]” It is beyond dispute
that a crane qualifies as “equipment” and “machinery.”

“Equipment” means “something with which a person,
organization, or thing is equipped.” AMERICAN HERITAGE DICTIONARY OF THE
ENGLISH LANGUAGE 602 (5th ed. 2016).4 One is “equipped” if “suppl[ied]
with necessities such as tools or provisions.” Id. For purposes of
summary judgment, it is undisputed that the Ocean Marine entities
were “equipped” with the cranes in that they were “suppl[ied] with”
them. Id.
A “machine” is “[a] device consisting of fixed and moving
parts that modifies mechanical energy and transmits it in a more
useful form,” and “machinery” is such devices “considered as a

group.” Id. at 1050-51. A crane is a “machine” because it consists
of “fixed and moving parts” that harness mechanical energy to raise
and lower heavy weights. Id. A group of cranes, then, is
“machinery.”
Peering past plain language, F&M contends that the cranes are
not “collateral” because they are not specifically identified in
the agreement. But F&M cites no authority to support the

4 A Justice of the United States Supreme Court and a leading
lexicographer have praised the American Heritage Dictionary of the
English Language as among “the most useful and authoritative for
the English language” for the period of 2001 to the
present. See Antonin Scalia & Bryan A. Garner, A Note on the Use
of Dictionaries, 16 Green Bag 2d 419, 423, 427-28 (2013).
proposition that cranes must be “mentioned as items separate and
distinct,” and the Court has found none.5 Louisiana law merely
requires that a security agreement “provide[] a description of the

collateral[.]” LA. REV. STAT. § 10:9-203(b)(3)(A). A description
suffices “if it reasonably identifies what is described.” LA. REV.
STAT. § 10:9-108(a). For example, “a description of collateral
reasonably identifies the collateral if it identifies the
collateral by . . . category.” LA. REV. STAT. § 10:9-108(b)(2).
Here, the commercial security agreement “reasonably identifies”
the cranes as collateral because it identifies them by category,
as “equipment” and “machinery.” Id. These cranes are adequately
described, and the third statutory requirement is met. See LA. REV.
STAT. § 10:9-203(b).

Accordingly, ECapital offers summary-judgment evidence to
satisfy each requirement of LA. REV. STAT. § 10:9-203(b) with respect
to the cranes bearing serial numbers 41322 and 41468. ECapital has
enforceable security interests in both. See LA. REV. STAT. § 10:9-
203(b). Because ECapital did not authorize the disposition of those

5 F&M instead invokes three opinions that allegedly establish
that cranes are “usually” mentioned separately from “equipment” in
the case literature. See Belle Pass Terminal, Inc. v. Jolin, Inc.,
2001-0149 (La. 10/16/01); 800 So. 2d 762; HWW Enters., Inc. v.
Env’tal Treatment Team, LLC, 2006-891 (La. App. 3d Cir. 2/28/07);
952 So. 2d 837; Samedan Oil Corp. v. Ultra Fabricators, Inc., 98-
1516 (La. App. 3d Cir. 3/3/9); 737 So. 2d 846. These opinions do
not contradict the commonsense command of the English language: A
crane is both “equipment” and “machinery” in these circumstances.
interests when Ocean Marine Contractors sold these cranes to F&M,
the interests survived the sale.6 See LA. REV. STAT. § 10:9-315(a).
The Court therefore finds that the record discloses no genuine

dispute as to any material fact regarding ECapital’s security
rights in these two cranes, and ECapital is entitled to judgment
as a matter of law recognizing and enforcing those rights.7
B.
ECapital next contends that it has an enforceable security

interest in the third crane. ECapital says that crane qualifies as
“collateral” under the commercial security agreement because F&M
bought it from Ocean Marine Contractors. F&M counters that the
third crane cannot be “collateral” because it was purchased from
Ocean Marine Rentals and, accordingly, is not subject to the

6 F&M asks the Court to reject ECapital’s security-rights
claims under the unclean hands doctrine. That doctrine is a defense
only to equitable claims. See H&E Equip. Servs., Inc. v. Sugar &
Power Int’l, LLC, 2016-1070, p. 6 (La. App. 1st Cir. 2/17/17); 215
So. 3d 446, 450. ECapital’s claims are legal —— not equitable. So,
the unclean hands doctrine does not apply.
7 F&M urges the Court to reject ECapital’s security interest
on the additional grounds that (1) F&M is a bona fide purchaser of
the cranes; (2) ECapital’s predecessor-in-interest, GI-47 Gibson,
waived any security interest in the cranes; and (3) the amounts
ECapital has already received constitute an accord and
satisfaction of the Ocean Marine Contractors debt. These arguments
fail as a matter of law for the reasons explained in section IV of
this Order and Reasons.
commercial security agreement between Ocean Marine Contractors and
Regions Bank.

Each side offers summary-judgment evidence to support its
position. To establish that it bought the third crane from Ocean
Marine Rentals, F&M invokes the declaration of its credit manager,
Randy Snyder, as well as a bill of sale on Ocean Marine Rentals
letterhead. ECapital also invokes the bill of sale, noting
(correctly) that the crane is described as an Ocean Marine
Contractors item.
The record is muddled. On these submissions, the Court finds
genuine disputes of material fact on the questions whether (1) the
third crane is “collateral” under the commercial security

agreement and (2) Ocean Marine Contractors had rights in the third
crane or the power to transfer rights in it. See LA. REV. STAT. §
10:9-203(b). The Court therefore denies ECapital’s motion for
summary judgment as to the third crane and turns to F&M’s summary-
judgment motion.

IV.
In the second cross-motion, F&M seeks summary judgment
dismissing ECapital’s claims on three grounds: (1) ECapital lacks
rights in the cranes under the commercial security agreement; (2)
ECapital’s predecessor-in-interest “waived” any security rights in
the cranes; and (3) the debt ECapital bought from Ocean Marine
Contractors has been satisfied.

A.
For its first argument, F&M says that ECapital lacks a
security-rights claim to the cranes because: (1) Ocean Marine
Contractors never paid for or possessed them, (2) F&M is a bona
fide purchaser of them, and (3) F&M was subrogated to MidSouth
Bank’s superior rights in them.

1.
F&M contends that ECapital lacks rights in the cranes because
the alleged grantor of security rights, Ocean Marine Contractors,
never paid for or possessed the cranes. Although F&M does not use
the appropriate statutory language, it appears to contend that the
debtor, Ocean Marine Contractors, lacked “rights in the collateral
or the power to transfer rights in the collateral to a secured
party.” LA. REV. STAT. § 10:9-203(b)(2).

As to the first and second cranes, F&M’s contention lacks
merit. The bills of sale for these cranes establish that they were
Ocean Marine Contractors’ property; so, it is beyond dispute that
Ocean Marine Contractors had “rights” in them. LA. REV. STAT. §
10:9-203(b)(2). Because Ocean Marine Contractors had “rights” in
the first and second cranes, the security interest in those cranes
is enforceable against third parties, like F&M. See LA. REV. STAT.
§ 10:9-203(b).

The third crane is more complicated. As explained in section
III(B) of this Order and Reasons, material factual disputes
preclude a summary-judgment ruling on Ocean Marine Contractors’
rights in the third crane.
2.
F&M next contends that it has superior rights in the cranes
because it is a bona fide purchaser of them.8 The contention clashes
with Louisiana secured-transaction law. Consider Chapter 9 of
Title 10 of the Louisiana Revised Statutes. See LA. REV. STAT. §§

10:9-101 — 10:9-809. Chapter 9 instructs that “a security interest
continues in collateral notwithstanding sale,” “[e]xcept as
otherwise provided in this Chapter.” LA. REV. STAT. § 10:9-315(a).
Because F&M fails to show how and where the bona fide purchaser

8 In support of its bona fide purchaser argument, F&M invokes
three aged opinions. See Pecora v. James 150 So. 2d 90 (La. Ct.
App. 4th Cir. 1963); Bartlette v. Michel Bros., 4 La. App. 654
(1925); Baldwin v. Sewell, 23 La. Ann. 444 (1871). Because these
opinions pre-date Louisiana’s adoption of Article 9, the Court
finds them unhelpful. See generally First Nat. Bank of Boston v.
Beckwith Machinery Co., 94-2065, p. 1151 (La. 2/20/95); 650 So. 2d
1148, 1151 (noting that Louisiana adopted U.C.C. Article 9 as
Chapter 9 of the Louisiana Commercial Laws, effective January 1,
1990).
doctrine is “provided in” Chapter 9, F&M has not shown that the
doctrine applies here.9 Id.

3.
F&M next contends that it was subrogated to MidSouth Bank’s
allegedly superior rights in the cranes when it paid off MidSouth
Bank’s loan to Ocean Marine Contractors. That loan was secured by
a purchase money security interest. A perfected purchase money
security interest generally has priority over a conflicting
security interest in the same goods or inventory. LA. REV. STAT. §
10:9-324(a)-(b). F&M says it “acceded to” the perfected purchase
money security interest when it paid off MidSouth Bank’s loan. The
Court disagrees.

A party “claiming a purchase-money security interest has the
burden of establishing the extent to which the security interest
is a purchase-money security interest.” LA. REV. STAT. § 10:9-

9 Even if the doctrine applied, it would fail here for lack
of evidentiary support. Neither the declaration of Robert McKenna
Jr., Executive Vice President of F&M, nor the declaration of Randy
Snyder, one of F&M’s credit managers, establishes that F&M lacked
knowledge of the security interests ECapital seeks to enforce.
True, Snyder attests that Ocean Marine Contractors and Ocean Marine
Rentals said that the only lien on the cranes was a purchase money
security interest held by MidSouth Bank. Snyder does not attest,
however, that F&M was unaware of other security interests. See
Matter of Samuels & Co., 526 F.2d 1238, 1243 (5th Cir. 1976) (en
banc) (“Lack of knowledge of outstanding claims is necessary to
the common law BFP.”).
103(g). Because the financing statements supporting MidSouth
Bank’s purchase money security interest terminated in December
2015, any purchase money security interest would now be

unperfected. See LA. REV. STAT. § 10:9-513(d). Accordingly, F&M has
not met its burden of establishing a perfected purchase money
security interest in the cranes.10
B.
F&M next contends that ECapital’s predecessor-in-interest,

GI-47 Gibson, “waived” its security rights by allowing F&M to
“exercise its rights as owner” of the cranes.
In Louisiana, waiver is “‘the intentional relinquishment of
a known right, power or privilege.’” Arceneaux v. Amstar Corp.,
2010-2329, p. 18 (La. 7/1/11); 66 So. 3d 438, 450 (quoting Steptore
v. Masco Const. Co., p. 4 93-2064 (La. 8/18/94); 643 So. 2d 1213,
1216). Waiver requires “an existing right, a knowledge of its
existence[,] and an actual intention to relinquish it[,] or conduct
so inconsistent with the intent to enforce the right as to induce
a reasonable belief that it has been relinquished.” Id. at 450-

51. Because waiver is an affirmative defense, the party asserting

10 F&M’s subrogation argument fails for the same reason. See,
e.g., Pelican Homestead and Sav. Ass’n v. Sec. First Nat. Bank,
532 So. 2d 397 (La. Ct. App. 3d Cir. 1988) (holding that the rights
a subrogee obtained by paying a superior creditor extinguished
upon termination of the superior creditor’s rights).
waiver bears the burden of proving it. See Gunderson v. F.A.
Richard & Assocs., 2009-1498, p. 16 (La. App. 3d Cir. 6/30/10); 44
So. 3d 779, 790.

F&M does not acknowledge, or offer summary-judgment evidence
establishing, the elements of waiver. Its contention fails for
that reason alone.
The contention is forfeited, too. In its initial brief, F&M
invoked only a January 11, 2017 letter that it sent to GI-47
Gibson. It did not invoke GI-47 Gibson’s response to the letter,
or any other document that would show GI-47 Gibson’s “actual
intention to relinquish” its security interest in the cranes.
Arceneaux, 66 So. 3d at 450. On reply, F&M urges —— for the first

time —— that the affidavits of Randy Snyder and Bob McKenna, as
well as the repair records for the cranes, prove waiver. The
argument is forfeited. See Conway v. United States, 647 F.3d 228,
237 n.8 (5th Cir. 2011) (citing Yohey v. Collins, 985 F.2d 222,
225 (5th Cir. 1993)).
Forfeiture and inadequate briefing aside, the “waiver”
argument fails on the merits. Nothing in the proffered affidavits
or repair records establishes that GI-47 “actual[ly] inten[ded] to
relinquish” its security rights or engaged in conduct “so
inconsistent with the intent to enforce the right[s] as to induce

a reasonable belief that it has been relinquished.” Arceneaux, 66
So. 3d at 450-51.
F&M advances a related argument: that GI-47 impliedly
authorized the disposition of its security rights. “Except as
otherwise provided in [Chapter 9]” of Title 10 of the Louisiana

Revised Statutes, a security interest in collateral survives sale
of the collateral, “unless the secured party authorized the
disposition free of the security interest.” LA. REV. STAT. § 10:9-
315(a). F&M offers no summary-judgment evidence that GI-47
directly authorized the disposition of the cranes free of its
security interest. It appears to contend, however, that GI-47
impliedly authorized the disposition by allowing it to “inspect,
maintain, and repair the cranes.” Not so.
Section 9-315(a) is generally “uniform with revised U.C.C.
Article 9[.]” LA. REV. STAT. § 10:9-315, Official Revision Comment

(2001). The basis for U.C.C. § 9-315(a) “is that a security
interest would be meaningless if the secured party could not reach
the collateral in the hands of a third party . . . when the debtor
disposes of it without authorization. William D. Hawkland,
Frederick H. Miller & Neil B. Cohen, 9B HAWKLAND U.C.C. SERIES § 9-
315:1 (2008). “Because § 9-315(a)(1) does not require a secured
party to take action to preserve its security interest, inaction
alone may not lead to a finding of implied authorization.” In re
Jersey Tractor Trailer Training, Inc., 580 F.3d 147, 155 (3d Cir.
2009). Acts of “[i]mplied authorization . . . must unequivocally
demonstrate an intent to waive the security interest.” 11 Part I
Anderson U.C.C. § 9-315:7 [Rev] (3d. ed.).

Here, F&M has not offered summary-judgment evidence
“unequivocally demonstrat[ing]” GI-47 Gibson’s intent to waive its
security interest in the cranes. Id. So, F&M’s implied-
authorization argument fails.
C.

F&M next contends that it is entitled to summary judgment
because ECapital’s debt “has been satisfied.” ECapital’s debt has
been “satisfied,” F&M continues, because ECapital has obtained
property valued at 3-4 times the price it paid for Ocean Marine
Contractors’ distressed debt. F&M says this constitutes an accord
and satisfaction.
“The doctrine of accord and satisfaction estops a creditor
from suing on a compromised debt.” River Bend Capital, LLC v.
Lloyd’s of London, 2010-1317, p. 3 (La. App. 4th Cir. 4/13/11); 63
So. 3d 1092, 1094 (citing Anesthesia East v. Bares, 594 So. 2d

1085 (La. Ct. App. 4th Cir. 1992). The party seeking to prove an
accord and satisfaction must establish three elements: (1) an
unliquidated or disputed claim between debtor and creditor; (2)
that the debtor tendered a check for less than the sum claimed by
the creditor; and (3) that the creditor accepted the tender by
negotiating the check. See River Bend Capital, 63 So. 3d at 1095
(citing Anesthesia East, 594 So. 2d at 1087).

F&M cannot show an accord and satisfaction of Ocean Marine
Contractors’ debt to ECapital. The partial dation en paiment
between ECapital and Ocean Marine Contractors acknowledges Ocean
Marine Contractors’ remaining $698,530.39 debt; it says that it is
“made and accepted for and in consideration of the partial
reduction of the Indebtedness.” (emphasis added). Because this
partial dation was obviously not intended to fully satisfy the
Ocean Marine Contractors debt, the contention lacks merit.
Perhaps anticipating the failure of its accord-and-
satisfaction argument, F&M urges the Court to prohibit ECapital

from “further recover[ing]” on unjust-enrichment grounds. The
Court declines.
Under Louisiana law, unjust enrichment has five elements: (1)
an enrichment, (2) an impoverishment, (3) a connection between the
enrichment and resulting impoverishment, (4) an absence of
“justification” or “cause” for the enrichment and impoverishment,
and (5) no other remedy at law. City of New Orleans v. BellSouth
Telecomm., Inc., 690 F.3d 312, 326 (5th Cir. 2012) (citing SMP
Sales Mgmt., Inc. v. Fleet Credit Corp., 960 F.2d 557, 560 (5th
Cir. 1992)). “‘Courts may resort to equity only in cases of unjust

enrichment for which there is no justification in law or
contract.’” SMP Sales Mgmt., 960 F.2d at 560 (quoting Carter v.
Flanagan, 455 So. 2d 689, 692 (La. Ct. App. 2d Cir. 1984)).

Here, a contract justifies ECapital’s actions as a secured
creditor of Ocean Marine Contractors. Accordingly, unjust
enrichment does not apply. See SMP Sales Mgmt., 960 F.2d at 560.

V.
In the third and final summary-judgment motion, ECapital
seeks an order judicially estopping F&M from contending that it
bought the third crane from Ocean Marine Rentals.

A.
ECapital contends that F&M should be judicially estopped from
claiming that it bought the third crane from Ocean Marine Rentals
because, in the Ohio litigation, it alleged in its complaint that
it bought all three cranes from Ocean Marine Contractors. ECapital
speculates that F&M changed its position in this litigation to
end-run ECapital’s security interest in Ocean Marine Contractors’
equipment. F&M denies seeking a tactical advantage and describes
the allegation as “ostensibly errant.”

B.
Judicial estoppel is “an equitable doctrine that prevents a
party from gaining an advantage by asserting contradictory
positions in different proceedings.” Barrios v. Centaur, L.L.C.,
942 F.3d 670, 678 & n.7 (5th Cir. 2019) (citing New Hampshire v.
Maine, 532 U.S. 742, 749 (2001)).

A court may apply judicial estoppel if (1) the estopped
party’s position is “clearly inconsistent” with its previous one;
and (2) the estopped party convinced the court to “accept” the
previous position. Barrios, 942 F.3d at 678 & n.7 (citing Gabarick
v. Laurin Mar. (Am.) Inc., 753 F.3d 550, 553 (5th Cir. 2014)).
Courts should also consider “whether the party seeking to assert
an inconsistent position would derive an unfair advantage or impose
an unfair detriment on the opposing party if not estopped.” New
Hampshire, 532 U.S. at 751. Because the doctrine “is intended to
prevent improper use of judicial machinery,” it is “within the
court’s discretion to apply.” Id. at 750.

The first requirement is met here. F&M takes the position in
this litigation that it bought the third crane from Ocean Marine
Rentals. In the Ohio litigation, however, it alleged in its
complaint that it bought all three cranes from Ocean Marine
Contractors. These positions are “clearly inconsistent.” Gabarick,
753 F.3d at 553; see also Afram Carriers Inc. v. Moeykens, 145
F.3d 298, 304 n.12 (5th Cir. 2003) (assuming, without deciding,
“that representations that a plaintiff makes in its complaint are
subject to the doctrine of judicial estoppel”).

The second requirement is also met. F&M obtained a default
judgment from the Ohio state court based, in part, on its
allegation that it bought all three cranes from Ocean Marine
Contractors. That court necessarily “accepted” F&M’s position when
it entered a default judgment in F&M Mafco’s favor. See Newfield

Exploration Co. v. Applied Drilling Tech., Inc., No. 01-CV-2746,
2003 WL 23253, at *4 (E.D. La. Jan. 2, 2003).
Although ECapital has established the requirements of
judicial estoppel, it has not convinced the Court to exercise its
discretion to apply the doctrine. See U.S. ex rel. Long v. GSDMIdea
City, L.L.C., 798 F.3d 265, 271 (5th Cir. 2015) (“Because judicial
estoppel is equitable in nature, trial courts are not required to
apply it in every instance that they determine its elements have
been met.”); Pegg v. Steel Dynamics, Inc., No. 1:16-CV-241, 2018
WL 1247874, at *4 (N.D. Miss. Mar. 9, 2018) (declining to apply

judicial estoppel after finding its elements met).
ECapital does not explain how F&M “derive[d] an unfair
advantage” from its change of position. Nor can it. In Ohio, the
seller of the third crane was not at issue: F&M gained nothing by
alleging that it bought all three cranes from Ocean Marine
Contractors. The allegation is the product of neglect —— not
gamesmanship. It strikes the Court as a simple mistake, which does
not threaten “the integrity of the judicial process.” Gabarick,
753 F.3d at 553 (citation omitted). Because applying judicial
estoppel would not “achieve substantial justice” in these

circumstances, the Court exercises its discretion not to apply the
doctrine. Reed v. City of Arlington, 650 F.3d 571, 576 (5th Cir.
2011) (citing New Hampshire, 532 U.S. at 750). Accordingly, the
Court denies ECapital’s alternative motion for partial summary
judgment judicially estopping F&M from contending that it bought
the third crane from Ocean Marine Rentals.

VI.

Accordingly, IT IS ORDERED that: (1) ECapital’s motion for
summary judgment enforcing and recognizing its security rights is
GRANTED IN PART as to the cranes bearing serial numbers 41322 and
41468 and DENIED IN PART as to the crane bearing serial number
41608; (2) F&M’s motion for summary judgment dismissing ECapital’s
security-rights claims is DENIED; and (3) ECapital’s alternative
motion for partial summary judgment precluding F&M from contending
that it bought the third crane from Ocean Marine Rentals is DENIED.

New Orleans, Louisiana, January 22, 2020

MARTI . C.\FELDMAN
UNITED STAWES DISTRICT JUDGE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10185176. Public record. Not legal advice.