Bayou Fleet, Inc. v. Bollinger Shipyards, Inc.

Louisiana Court of Appeal
197 So.3d 797 (2016)

ELI5:

Rule of Law:

The discovery rule exception to prescription, known as contra non valentem, does not apply to a plaintiff whose ignorance of their cause of action is attributable to their own willfulness or neglect, particularly when the plaintiff is a sophisticated party that failed to exercise reasonable diligence in monitoring its valuable property.

Facts:

A large crane boom, originally owned by Cajun Crane Co., was left on pipe racks at a shipyard on the New Orleans Industrial Canal sometime in the late 1980s or early 1990s.
In 2000, Bollinger took over the lease for the shipyard where the boom was located.
Cajun Crane Co. merged with Bayou Fleet in 2003, making Bayou Fleet, a company owned by sophisticated and experienced businessmen in the marine industry, the boom's owner.
Bayou Fleet asserted it had an informal understanding to store the boom at the shipyard for free, a claim Bollinger's management denied.
Following Hurricane Katrina in 2005, it became public knowledge, especially within the local marine industry, that Bollinger was terminating its lease and closing the shipyard due to the closure of the Mississippi River-Gulf Outlet.
In late October 2007, Bollinger hired contractors to clear all scrap and debris from the shipyard property to comply with its lease termination agreement.
The contractors cut the crane boom into pieces and sold it for scrap, with the process being fully completed no later than November 16, 2007.
A representative of Bayou Fleet did not visit the site to inspect the boom until July 2008, at which time they discovered it was gone.

Procedural Posture:

On March 16, 2009, Bayou Fleet, Inc. filed a Petition for Damages against Bollinger Shipyards, Inc. for wrongful conversion in a Louisiana state trial court.
Bollinger filed a Reconventional Demand seeking storage fees from Bayou Fleet.
Bollinger filed a pre-trial Exception of Prescription, arguing the claim was filed too late; the trial court initially denied this exception.
After a seven-day bench trial on the merits, the trial court entered a final judgment on December 18, 2014, in favor of Bollinger, dismissing Bayou Fleet's conversion claim with prejudice because it was prescribed.
The trial court also dismissed Bollinger's Reconventional Demand for storage fees.
Bayou Fleet appealed the trial court's final judgment to the Louisiana Court of Appeal, Fourth Circuit.

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Issue:

Does the discovery rule exception (contra non valentem) apply to toll the one-year prescriptive period for a conversion claim when the plaintiff's failure to discover the destruction of its property was due to its own lack of reasonable diligence?

Opinions:

Majority - Jenkins, J.

No. The discovery rule exception, contra non valentem, does not apply because Bayou Fleet failed to prove its ignorance of the boom's destruction was not a result of its own lack of reasonable diligence. The one-year prescriptive period for conversion is strict and begins when the damage is sustained. Although Bayou Fleet did not discover the loss until July 2008, its claim prescribed in November 2008, one year after the boom was destroyed in November 2007. The court found that as sophisticated businessmen in the marine industry, Bayou Fleet's owners had constructive knowledge that the shipyard was closing. Their failure to inspect a high-value asset more than annually, combined with their inaction despite public knowledge of the shipyard's closure, constituted a lack of reasonable diligence. Therefore, this case does not present the 'extreme circumstances' necessary to justify the application of contra non valentem.

Concurring - Bonin, J.

I concur with the result. The author agrees with the majority's conclusion but writes separately to reiterate his dissenting view from a different, recently decided case, Butler v. La. Mut. Med. Ins. Co., which the majority opinion cited on the ancillary issue of taxing court costs. This opinion does not substantively address the prescription or conversion claims.

Analysis:

This decision reinforces the strict construction of the equitable doctrine of contra non valentem in Louisiana tort law, particularly for sophisticated commercial parties. It establishes that the 'discovery rule' is not an automatic extension for plaintiffs who are unaware of their injury; they must demonstrate that their ignorance was not a product of their own neglect. By emphasizing the plaintiff's business acumen and the public availability of information regarding the shipyard's closure, the court sets a high bar for what constitutes 'reasonable diligence.' The ruling signals that courts will be less forgiving of passive asset management and will expect property owners to remain actively informed about circumstances that could affect their property, especially when it is of high value.

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