Dual Drilling Co. v. MILLS EQUIPMENT, INC.

721 So. 2d 853, 1998 WL 827396
CourtSupreme Court of Louisiana
DecidedDecember 1, 1998
Docket98-C-0343, 98-C-0356
StatusPublished
Cited by79 cases

This text of 721 So. 2d 853 (Dual Drilling Co. v. MILLS EQUIPMENT, INC.) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dual Drilling Co. v. MILLS EQUIPMENT, INC., 721 So. 2d 853, 1998 WL 827396 (La. 1998).

Opinion

721 So.2d 853 (1998)

DUAL DRILLING COMPANY
v.
MILLS EQUIPMENT INVESTMENTS, INC., Travis Vollmering, Atlas Iron and Metal Company, Doyle Henderson, and Southern Scrap of Morgan City, Inc.

Nos. 98-C-0343, 98-C-0356.

Supreme Court of Louisiana.

December 1, 1998.

*854 Jack Marie Alltmont, Raymond Peter Ward, Sessions & Fishman, New Orleans; Dale Patrick Martin, Lippman, Mahfouz & Martin, Morgan City, for Applicant in No. 98-C-0343.

Charles Munson Lanier, Jr., Michael Mossy Christovich, Patricia Broussard Judice, George Alexander Weller, Joseph T. Puhekker, George Febiger Riess, New Orleans, Darrell Warren Ashy, for Respondent in No. 98-C-0343.

Darrell Warren Ashy, Joseph T. Puhekker, George Febiger Riess, New Orleans, for Applicant in 98-C-0356.

Jack Marie Alltmont, Raymond Peter Ward, Sessions & Fishman, New Orleans; Dale Patrick Martin, Lippman, Mahfouz & Martin, Morgan City; Charles Munson Lanier, Jr., Michael Mossy Christovich, Patricia Broussard Judice, George Alexander Weller, New Orleans, for Respondent in No. 98-C-0356.

TRAYLOR, Justice.[*]

We granted writs in this case to determine whether Louisiana law provides for a tort of conversion akin to that of the common law which imposes strict liability upon the tortfeasor. *855 Intertwined in this is the determination of whether the tortfeasors should be held liable jointly or otherwise.

FACTS AND PROCEDURAL HISTORY

On October 15, 1990, partners Travis Vollmering (Vollmering) and Atlas Iron and Metal Company (Atlas) agreed to purchase an inoperative off-shore oil rig (Rig 16) from Dual Drilling (Dual) located at the Tidex shipyard in Amelia, Louisiana. Rig 16 was comprised of three segments: an engine room, a cement room, and a pump room. The contract of sale established that Dual retained ownership of the quarters package, the derrick (complete with starting legs and storage baskets), and two National mud pumps. Vollmering reviewed the offer, blue prints of Rig 16, and inspected the rig prior to the purchase.

Subsequent to the sale, Atlas engaged Southern Scrap Recycling, Morgan City (Southern) to dismantle Rig 16 and sold the majority of the scrap metal to Southern. Southern memorialized the agreement, stating in pertinent part:

This will confirm our conversation between your representative Mr. Travis Vollmering and the writer with reference to the Dual rigs located at the Tidewater Yard in Amelia, La. It is mutually agreed and understood that you will be responsible for removing any large items from the rig. These items will include but not be limited to the following: cranes, mud pumps, derrick base, SCR unit and transformers, rotary skid, accumulator and choke manifold, generators and engines, P Tanks. Said items being referred to herein as "retention items." ...
Southern Scrap will assist you by furnishing burners to cut the retention items loose, however, Southern Scrap is not responsible for the condition of those items. The burners assigned to this task will be working under your supervision and it will be your responsibility to furnish whatever labor and equipment is necessary to remove and load the retention items ... All material left after the retention items are removed (I.E. "material to be scrapped") will become property of Southern Scrap and we will pay Atlas Iron and Metal $52.00 per gross (2240#) ton for this material... Southern Scrap will be responsible for cutting, loading, and transporting the material to be scrapped and shall furnish whatever personnel and equipment is necessary to accomplish this work ...

Vollmering visited the shipyard with a Southern employee and identified for him each item that was to be cut. He instructed the Southern employee where to begin cutting and mistakenly identified an adjacent rig component (Rig 25) as part of his property. Vollmering marked, "Do Not Cut" on what he deemed to be salvageable items. Prior to the commencement of this project, a Dual employee, James Monnin, marked "Do Not Cut" on three sides of Rig 25 with flourescent orange spray paint. In late February, 1991, as instructed by the partnership, Southern began cutting Rigs 16 and 25. A shipyard worker noticed Southern employees cutting Rig 25 and told them it was "not to be cut." Southern employees responded that he should not worry and should continue with his business.

On March 7, 1991, James Monnin and two other Dual employees, Khaled Farag and David Goodwill, visited the shipyard and found Rig 25 and the associated equipment missing. Two Southern employees told Farag that their supervisor, Mr. Hunter, ordered them to cut Rig 25 although it was marked, "Do Not Cut/Save XX."

At trial, Vollmering testified his impression from his dealings with Dual was that Rig 25 was part of Rig 16. He contended that the exclusion items named in the contract of sale were the only items excluded from the sale, and he prepared his bid based upon this belief. Vollmering and Southern's employees testified that all salvageable items were removed by Vollmering and that Southern never took possession of these items. The Southern employees testified that, because they did not know what a rig package was, they acted as instructed by Vollmering.

Khaleg Farag testified that the cost of the used converted rig structure and equipment was difficult to establish because there were not many used products on the market. The *856 lowest replacement values submitted by the plaintiff were: $213,811 for Rig 25, $64,296 for the swivel, $26,790 for the spinner, $4,428 for the kelley valve, and $26,518 for the pressure tank. These quotes were for a refurbished rig and new associated equipment valued at the time of the loss. James Monnin, who worked for Dual at the time of the conversion, valued Rig 25 at approximately 75% of "new" condition. Doyle Henderson of Atlas, a dealer in surplus oil rig equipment, testified that "rig condition" 500 ton swivels could be purchased for $9000 to $14,000, reconditioned spinners could be purchased for $3000, kelley valves could be purchased for $400, and pressure tanks could be purchased for between $5000 and $6000. He further testified that new B-44 model swivels could be purchased new for $8000. Henderson testified that in the depressed oil economy of 1991, the converted associated equipment was valued at about 50% of its value at the time of trial.

The trial court found that Dual was entitled to replacement cost of Rig 25 and associated equipment "less reasonable depreciation." The trial court rejected the lower values for the associated equipment, finding that Dual was entitled to replacement cost, and Defendants failed to show a basis for depreciation. The trial court further found that the Defendants offered no evidence of the value of the items before the loss. Thus, Plaintiff was awarded $213,811 to refurbish a used cement package building, and new associated equipment was valued at $26,518 for the P-tank, $64,296 for the 500 ton swivel, $26,790 for the kelley spinner, and $4,428 for the upper kelley valve. The trial court found that because Southern was advised orally and in writing that Rig 25 was "not to be cut," it knew or should have known that Defendants were not its owners. The trial court held Defendants solidarily liable for 100% of Plaintiff's loss. The court of appeal affirmed. 97-1010 (La.App. 4 Cir.); 705 So.2d 1246.

LAW AND ANALYSIS

The threshold issue before us is whether Louisiana law provides a strict liability remedy akin to the common law tort of conversion.

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