Puerto Rico’s Latest Debt Restructuring Proposal

On April 11, 2016, Puerto Rico announced its latest debt restructuring proposal. The U.S. Territory faces $70 Billion in total debt, a 45% poverty rate, and a shrinking population, all of which threaten to collapse its economy. The government already stated that it cannot afford to pay the $422 million due on May 1, 2016.

The most recent plan would reduce a $49 Billion dollar portion of its debt by $12 to $17 billion by exchanging existing debt for two classes of new bonds—a base bond and a capital appreciation bond.

Stateside, the U.S. congress is expected to unveil a new bill that would put Puerto Rico’s finances under federal oversight and likely provide a legal debt restructuring mechanism. The bill is expected to be unveiled this week.

http://www.reuters.com/article/usa-puertorico-debt-idUSL2N17E0M6

Juan C. Obregon
jobregon@mblb.com

Can a LLC Recover Damages for a Member’s Slip and Fall?

In Louisiana, corporations and business entities are juridical persons that often have rights similar to natural persons, i.e. humans. A recent decision by the Louisiana Fifth Circuit Court of Appeal helps clarify the legal distinctions between juridical and natural persons. In that case, Deborah Norred, the sole member of American Rebel Arms, LLC (“LLC”), suffered bodily injuries as the result of a slip and fall in a restaurant in Jefferson Parish. Individual lawsuits were thereafter filed by both Norred and the LLC against the restaurant. In her capacity as the sole member of the LLC, Norred alleged that due to her injuries she was unable to open the LLC as originally scheduled, thus resulting in business losses. The restaurant filed a motion asserting that a LLC has no cause of action for personal injuries caused to its sole member. The district court sustained the motion and dismissed the LLC’s claims with prejudice.

On appeal, the Louisiana Fifth Circuit noted that the purpose of a peremptory motion for no cause of action is to address whether, on the face of the petition, accepting all allegations as true, if there is a valid cause of action for relief. As the plaintiff’s claims sounded in negligence, the sole issue was whether the restaurant owed the LLC a legal duty. The court noted that duties that arise under the Louisiana Merchant Liability Statute only extend to natural persons, not juridical persons such as LLCs. Because the restaurant did not owe a duty to the LLC, it had no valid cause of action stemming from Norred’s slip and fall. The district court’s dismissal of the LLC was affirmed.

American Rebel Arms, LLC v. New Orleans Hamburger and Seafood Company

Jeremiah N. Johns
jjohns@mblb.com

Failure to Formally Cancel Policy Costs Insurer

A recent decision by the Louisiana First Circuit Court of Appeal demonstrates the importance of formally cancelling an insurance policy when coverage has lapsed or expired. In this case, Smith filed a Petition for Damages against Shelmire and her auto liability insurer, Gramercy Insurance Company (“Gramercy”), for an automobile accident that occurred on July 27, 2010. Shelmire failed to pay her insurance premium that was due on July 20, 2010. Notably, a few hours after the motor vehicle accident, Shelmire went to the insurance company’s office and paid the outstanding premium. Gramercy proceeded to pay the property damage claim.

In the lawsuit, Gramercy filed a motion for summary judgment asserting that there was no insurance coverage at the time of the accident because Shelmire had allowed coverage to lapse. The judge denied the motion and the case proceeded to a bench trial where the court ruled that Gramercy was responsible because it never formally cancelled Shelmire’s policy. Gramercy thereafter appealed to the Louisiana First Circuit Court of Appeal, which noted that an insurer has the burden to establish that a policy had been cancelled for nonpayment of premium. The court pointed out that Gramercy offered no credible evidence that it had actually cancelled the insurance policy. Rather, Gramercy actually paid Shelmire’s property damage claim knowing that the accident had occurred after coverage had technically lapsed. Accordingly, the lower court’s decision was affirmed.

This case exemplifies the importance of being mindful of the voluminous regulations that govern the insurance industry in Louisiana, in addition to the hundreds of cases interpreting these same regulations.

Smith v. Gramercy Insurance Company

Jeremiah N. Johns
jjohns@mblb.com

Deepwater Horizon Settlement

On April 4, 2016, U.S. District Judge Carl Barbier, approved a Consent Decree between BP, the United States, and the Gulf States (Alabama, Florida, Louisiana, Mississippi, and Texas) related to the civil claims brought in response to the Deepwater Horizon explosion on April 20, 2010 and the subsequent discharge of oil from the Macondo Well site. Under the agreement, BP agreed to pay $5.5 billion in civil damages to be paid in installments through 2031. BP also agreed to pay $7.1 billion for Natural Resources Damages. Additional payments, penalties and interest were also included for a total settlement amount as much as $20.8 billion.

In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010

Pierce C. Azuma
pazuma@mblb.com

Is Your Website ADA Compliant?

Title III of the Americans with Disabilities Act (“ADA”) has traditionally been thought of as requiring access to physical places of public accommodations to disabled individuals. Title III does not expressly apply to websites. However, in certain situations, courts have begun to extend the reach of the ADA to websites. In National Federation for the Blind v. Target Corporation, a class action lawsuit was filed against Target alleging that Target’s website was not accessible to blind individuals. The court rejected Target’s argument that a website is not a “place of public accommodation,” noting that the purpose of the ADA is broader than physical access, especially where there is a nexus between a place of public accommodation and website. Rather, the court held that the ADA bars actions that “impair a disabled person’s ‘full enjoyment’ of services or goods of a covered accommodation.”

The Department of Justice is evidently in support of expanding the scope of the ADA to cover certain websites. In June 2015, the DOJ filed Statements of Interest in class action lawsuits brought against two private universities in which the plaintiffs sought to have thousands of videos posted on the universities’ websites to be captioned for the hearing impaired. The plaintiffs were not students who enrolled in courses that used uncaptioned video content. Rather, the plaintiffs asserted that video content should be made accessible to the public at large. In briefs to the court, the DOJ stated that a final rule on web accessibility is scheduled to be released in the spring of 2016. Perhaps evidencing things to come, the DOJ argued that the universities should make online programming accessible to “the public at large” for topics of general interest.

Website accessibility is a legal gray area that will continue to develop with time and advances in technology. However, the general trend appears to be in favor of expanding the scope of the ADA so that websites are accessible to the disabled.

Jeremiah N. Johns
jjohns@mblb.com

Jack Squat!

Plaintiff alleged that he had an arrangement with defendant-casino where he was provided the exclusive gambling use of a specific slot machine (“Machine”) over a 16.5 month period. Plaintiff and his wife began playing the Machine on February 29, 2013. Through a “capping” allowance by the casino, plaintiff could take breaks from playing the Machine for two hours or longer and thereafter resume play without anyone else having played it. Plaintiff stopped playing the Machine on July 14, 2014 after he filed a complaint with the State Gaming Commission (“Commission”) to investigate why the Machine had never hit a jackpot.

Plaintiff’s wife initially picked out the Machine because the progressive jackpot reflected that it was $101,000 and it was known that it had last hit the progressive jackpot two years earlier at approximately that same amount. As plaintiff continued to play over the 16.5 months, the jackpot increased to $155,300. As the increase occurred, plaintiff alleged that the casino management told him the Machine was probably at a point where the jackpot could be hit. Plaintiff also alleged in his Petition that as the time of his constant play he was granted longer “cap” times to three hours and then to twelve hours. He was also extended more privileges and accommodation at the casino hotel. Most devastatingly, he alleged that in 2013 alone he lost over $500,000 on the Machine.

After plaintiff complained to the Commission for his failure to hit the jackpot, the casino advised plaintiff that he was banned from the casino on July 24, 2014. Thereafter plaintiff filed a Petition in the First Judicial District, Parish of Caddo, Louisiana outlining the allegations stated above. The trial court granted the casino’s Exception of No Cause of Action dismissing plaintiff’s claims. Thereafter, plaintiff appealed to the Court of Appeal for the Second Circuit of Louisiana.

On appeal, plaintiff urged 1) an oral contract existed with the consent of plaintiff and the casino implied by each party’s actions, 2) detrimental reliance, and 3) unjust enrichment, all of which provided grounds for reversal of the trial court’s ruling. The court of appeals held that plaintiff’s inability to assert a valid object of the cause to be fatal to his action. Plaintiff’s view that the casino represented to him it could affect the random outcome of the machine by guaranteeing plaintiff use of the machine was mistaken. It went on to hold that the mere fact that the casino extended to the plaintiff many privileges and a “cap” time for the Machine presents no actionable claim.

With his eyes on the jackpot, unfortunately, this plaintiff ended with jack squat.

Master v. Red River Entm’t, L.L.C.

Philip D. Lorio, IV
plorio@mblb.com

American Transportation Research Institute Releases List of Most Congested Freight Locations

Using trucking operations data and customized software, the American Transportation Research Institute (ATRI) recently analyzed truck-oriented congestion points across the national highway system. For 2015, the Top 10 choke-points were:

  1. Atlanta, Georgia: I-285 AT I-85 (NORTH)
  2. Chicago, Illinois: I-290 AT I-90/I-94
  3. Fort Lee, New Jersey: I-95 AT SR 4
  4. Louisville, Kentucky: I-65 AT I-64/I-71
  5. Houston, Texas: I-610 AT US 290
  6. Houston, Texas: I-10 AT I-45
  7. Cincinnati, Ohio: I-71 AT I-75
  8. Houston, Texas: I-45 AT US 59
  9. Los Angeles, California: SR 60 AT SR 57
  10. Houston, Texas: I-10 AT US 59

Notably, four of the ten are located in Houston, Texas. No location in the New Orleans Metropolitan Area made the Top 100, and the only location in Louisiana to make the list was Baton Rouge, Louisiana at I-10 to I-110, which checked in at number 19.

Eric Winder Sella
esella@mblb.com

Monumental Controversy

After much discussion by city officials and organizations such as the Historic District Landmarks Commission, the Human Relations Commission, and the Vieux Carre Commission, on December 17, 2015, the New Orleans City Council voted 6-1 to remove four monuments honoring confederate leaders and a fourth commemorating an 1874 battle between the White League and the City’s first integrated police force: Robert E. Lee Monument, the P.G.T. Beauregard Equestrian Monument, the Jefferson Davis Monument, and the Battle of Liberty Place Monument. The ordinance was thereafter signed into law.

Shortly after the City Council voted to remove the monuments, Plaintiffs filed a lawsuit in the United States District Court for the Eastern District of Louisiana asserting approximately twelve causes of action falling into three broad categories: (1) claims alleging violations of federal statutes designed to protect historic sites; (2) claims asserted under 42 U.S.C. § 1983 and the First, Fifth, and Fourteenth Amendments of the United States Constitution; and (3) claims alleging violations of the Louisiana Constitution and state law. On the same day, Plaintiffs filed a Motion for Temporary Restraining Order and Preliminary and Permanent Injunctive Relief, requesting that the Court enjoin and prevent the City from moving, removing, disassembling, altering, placing into storage, or in any way tampering with the four monuments at issue.

Amongst their multiple claims, plaintiffs claimed that the so called “Federal Defendants” violated the National Historic Preservation (“NHPA”) Act by failing to conduct the requisite review to determine whether the planning, funding, construction and maintenance of all phases of the streetcar network in New Orleans had the potential to cause adverse effect on historic properties adjacent to any of the streetcar lines, such as the monuments. Section 106 of the NHPA prohibits federal agencies from approving the expenditure of federal funds on an undertaking without taking into account the effect of the undertaking on any historic property. The Federal Defendants urged that the required review occurred and resulted in a finding that the projects would have no adverse effect on historic property. Furthermore, they urged that the funding of the projects bared no factual, legal or causal nexus to the removal or persistence of the four monuments at issue.

In agreeing with the Federal Defendants on this, and many other claims by plaintiffs, the court denied plaintiffs’ Motion for Temporary Restraining Order and Preliminary and Permanent Injunctive Relief, thus allowing plans to remove the controversial monuments to move forward.

Monumental Task Comm., Inc v. Foxx

Philip D. Lorio, IV
plorio@mblb.com

It’s Mardi Gras Time – Defense and Indemnification Style

Plaintiff alleged that she sustained bodily injuries while exiting the Pontchartrain Center after attending the Krewe of Argus’ annual Mardi Gras ball. She filed a lawsuit against Argus, the City of Kenner (“City”), the company that manages the Pontchartrain Center, and Argus’ insurer. Prior to the incident, Argus entered into a Use License Agreement (“Agreement”) with the City and the management company for use of the Pontchartrain Center, and both entities were named as additional insureds in the insurance policy.

After suit was filed, Argus and the insurer (“appellants”) refused to defend and indemnify the City arguing that the incident occurred as the result of a defect the City knew about when the Agreement was signed. The trial court disagreed and granted the City’s motion for summary judgment finding that it was entitled coverage under the policy.

On appeal, appellants argued that the policy only provided the coverage to the City for unknown defects to the Pontchartrain Center. The Louisiana Fifth Circuit Court of Appeals found that the policy unambiguously named the City and the management company as additional insureds with no limitations on coverage. As such, because the insurance policy was clear, there was no need to consider extrinsic evidence that the appellants did not intend to extend additional insurance coverage to defects known by the City.

City of Kenner v. Certain Underwriters at Lloyd’s and Krewe of Argus, Inc.

Jeremiah N. Johns
jjohns@mblb.com

Rhode Island Implements Tolls Targeting Truckers

Rhode Island has instituted new tolls aimed at commercial vehicles travelling through the state. Under the tolls, 18-wheelers will pay up to $20.00 to cross the state on Interstate 95. A single truck will be capped at paying $40.00 per day. The tolls will be paid at fourteen gantries across the state, each charging an additional $3.00. The tolls have been estimated to bring $45 million to $100 million each year into state coffers, which the state plans to use to repair deteriorating bridges. The Rhode Island State Police is discussing plans to prevent trucks from exiting highways to avoid the tolls.

Eric Winder Sella
esella@mblb.com