Court Opinion

ID: 4708127
Source: CourtListenerOpinion
Date Created: 2021-07-31 00:00:34.202235+00
Date Added: 2024-06-11T08:06:48.651529
License: Public Domain

Case: 20-20540     Document: 00515959587         Page: 1     Date Filed: 07/30/2021

              United States Court of Appeals
                   for the Fifth Circuit
                                                                       United States Court of Appeals
                                                                                Fifth Circuit

                                                                              FILED
                                                                          July 30, 2021
                                  No. 20-20540                           Lyle W. Cayce
                                                                              Clerk

   In re: In the Matter of the Complaint of RLB
   Contracting, Incorporated, Owner of M/V Bayou
   Chevron, and Owner of M/V Johnathon King Boyd, for
   Exoneration from or Limitation of Liability

   RLB Contracting, Incorporated,

                                                            Petitioner—Appellee,

                                       versus

   Genesis Energy, L.P.,

                                                           Claimant—Appellant.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:18-CV-3844

   Before Haynes, Graves, and Willett, Circuit Judges.
   Per Curiam:*

          *
            Pursuant to 5th Circuit Rule 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   opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
Case: 20-20540       Document: 00515959587             Page: 2      Date Filed: 07/30/2021

                                        No. 20-20540

          In 2018, a dredging barge owned by RLB Contracting, Inc. (“RLB”),
   allegedly allided with a submerged gas pipeline, resulting in a fire that
   destroyed the barge. RLB thereafter filed an action for exoneration or
   limitation of liability in federal district court.           Genesis Energy, L.P.
   (“Genesis”) filed a negligence claim against RLB in this action, asserting that
   it was the owner of the pipeline. This assertion went unchallenged, and the
   case proceeded.
          Over a year and a half later, RLB filed a motion to dismiss under
   Federal Rule of Civil Procedure 12(b)(1), claiming that subsidiaries of
   Genesis, not Genesis itself, owned and operated the pipeline. Genesis
   argued that it was a proper party but also moved for leave to amend its claim
   to join the relevant subsidiaries as co-claimants under Federal Rule of Civil
   Procedure 17(a)(3).
           Despite RLB’s express statement that it was not asserting a Federal
   Rule of Civil Procedure 17(a) real-party-in-interest claim, the district court
   construed RLB’s motion to dismiss as making that argument. Applying the
   Rule 17(a) framework, the district court determined that RLB’s motion to
   dismiss was timely and that Genesis’s claim properly belonged to its
   subsidiaries, not Genesis. The district court further determined that Genesis
   lacked a reasonable basis for its failure to name the correct parties, and
   accordingly denied its motion to amend. Genesis timely appealed. 1
           On appeal, both parties accept that Rule 17 (rather than Rule 12(b)(1))
   provides the proper framework. RLB offered little explanation for why it
   waited so long to file the motion to dismiss despite having the documents it
   claimed supported the argument for about a year. A Rule 17(a) motion is

          1
              The district court had jurisdiction under 28 U.S.C. § 1333. We have appellate
   jurisdiction under 28 U.S.C. § 1291.

                                              2
Case: 20-20540         Document: 00515959587              Page: 3       Date Filed: 07/30/2021

                                          No. 20-20540

   timely “so long as joinder of the real party in interest remains practical and
   convenient.” In re Signal Int’l, LLC, 579 F.3d 478, 488 (5th Cir. 2009).
   Given the fact that the usual time for amendment had passed, 2 we conclude
   that the district court should not have found the motion to dismiss timely
   while simultaneously denying Genesis the time to amend.
           Even setting aside the timeliness of the motion to dismiss, we
   conclude that the district court should have permitted Genesis to amend. 3
   Under Rule 17(a)(1), “[a]n action must be prosecuted in the name of the real
   party in interest.” However, if a defendant objects under Rule 17(a)(1), Rule
   17(a)(3) permits the real party in interest to “ratify, join, or be substituted
   into the action.” A district court abuses its discretion by denying a Rule
   17(a)(3) motion if the error in naming the correct party was due to an
   “understandable mistake.” Wieburg v. GTE Sw., Inc., 272 F.3d 302, 308 (5th
   Cir. 2001); see also Rideau v. Keller Indep. Sch. Dist., 819 F.3d 155, 165–66 (5th
   Cir. 2016) (explaining that a “good-faith, nonfrivolous mistake” compels
   ratification, joinder, or substitution under Rule 17(a)(3)).
           Here, the real-party-in-interest determination was complicated by,
   among other things, Genesis’s belief that its position as a parent, its corporate
   structure, and its debtor status, together with the United States Coast
   Guard’s assertion that Genesis itself was liable for the costs of removing

           2
              Indeed, prior to filing its motion to dismiss, RLB had filed a motion for entry of
   default against unknown claimants, which the district court granted, thereby barring any
   new claimants from joining the action. Consequently, at the time RLB filed its motion to
   dismiss, it was impossible for Genesis to join its subsidiaries without intervention by the
   district court.
           3
              We review for abuse of discretion. Wieburg v. GTE Sw., Inc., 272 F.3d 302, 308
   (5th Cir. 2001). Our review is guided by the well-established principle that “[t]he Federal
   Rules are diametrically opposed to a tyranny of technicality and endeavor to decide cases
   on the merits.” Amberg v. FDIC, 934 F.2d 681, 686 (5th Cir. 1991).

                                                3
Case: 20-20540      Document: 00515959587            Page: 4    Date Filed: 07/30/2021

                                      No. 20-20540

   pollution caused by the allision, supported its status as a proper party (a
   position it still holds while willing to and desirous of joining the subsidiaries).
   Moreover, there is no evidence that Genesis acted in bad faith, nor that
   permitting its subsidiaries to join the action would meaningfully prejudice
   RLB (or even delay the case). Accordingly, the district court abused its
   discretion by denying Genesis’s motion to amend.
          We REVERSE and REMAND to permit the joinder of Genesis’s
   subsidiaries and for further proceedings consistent with this opinion.

                                           4