Louisiana Pigment Company, Lp v. Air Liquide America Corp., Lp

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

13-698

LOUISIANA PIGMENT COMPANY, L.P.

VERSUS

AIR LIQUIDE AMERICA, L.P. AND
AIR LIQUIDE LARGE INDUSTRIES, US L.P.

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APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2012-2617
HONORABLE RONALD F. WARE, DISTRICT JUDGE

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JIMMIE C. PETERS
JUDGE

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Court composed of Sylvia R. Cooks, Jimmie C. Peters, J. David Painter, James T.
Genovese, and John E. Conery, Judges.

REVERSED AND RENDERED.

James M. Garner
Debra J. Fischman
Jennifer H. Mabry
Sher Garner Cahill Richter Klein & Hilbert, L.L.C.
909 Poydras Street
Twenty-Eighth Floor
New Orleans, LA 70112
(504) 299-2100
COUNSEL FOR DEFENDANTS/APPELLANTS:
Air Liquide America, L.P.
Air Liquide Large Industries, US L.P.

Rudie R. Soileau, Jr.
Hunter W. Lundy
Daniel A. Kramer
Lundy, Lundy, Soileau & South LLP
501 Broad Street
Lake Charles, LA 70601
(337) 439-0707
COUNSEL FOR PLAINTIFF/APPELLEE:
Louisiana Pigment Company, L.P.

PETERS, J.

This litigation involves a contract dispute over the sale and delivery of

oxygen and nitrogen to a Louisiana facility currently operated by the plaintiff,

Louisiana Pigment Company, L.P. The defendants in this litigation, Air Liquide

America, L.P. and Air Liquide Large Industries, US L.P., appeal the trial court‟s

denial of their declinatory exception of improper venue. For the following reasons,

we reverse the trial court judgment and render judgment granting the exception of

improper venue and dismissing the lawsuit of Louisiana Pigment Company, L.P.

against Air Liquide America, L.P. and Air Liquide Large Industries, US L.P., but

without prejudice.

DISCUSSION OF THE RECORD

The litigation has as its origin a September 1, 1990 contract between Big

Three Industrial Gas, Inc. (Big Three) and Kronos Louisiana, Inc. (Kronos), both

Delaware corporations. In the contract, Big Three agreed to deliver oxygen and

nitrogen to a Kronos‟ Calcasieu Parish chemical manufacturing facility for use in

its manufacturing process. The contract identified the point of delivery and

ownership transfer of the oxygen and nitrogen as Big Three‟s meters, located

inside Kronos‟ Calcasieu Parish facility, and provided that the oxygen and nitrogen

originating from various plants owned by Big Three would to be transported to

Kronos‟ facility through a pipeline system running along the Texas and Louisiana

Gulf Coast.

On September 23, 1993, Louisiana Pigment Company, L.P. (Louisiana

Pigment) came into being as a limited partnership, with Kronos and Toxide

America, L.L.C. (Toxide) as partners in the endeavor. On the same day Louisiana

Pigment was created, Kronos assigned the September 1, 1990 contract to it with

the acceptance and concurrence of Big Three. By January of 1994, Big Three

Industrial Gas, Inc. came to be identified as Big Three Industries, Inc., an Air

Liquide Group Company. Immediately thereafter, Air Liquide America, L.P. (Air

Liquide America) became the party at interest in the contract.

On November 25, 2002, Air Liquide America submitted a price schedule to

Louisiana Pigment, to take effect on January 1, 2003, for prices affecting “the use

of supplemental, excess, liquid, or peaking product per the provisions of your

agreement with Air Liquide.” It informed Louisiana Pigment that this

supplemental rate would not apply to normal deliveries of its product. On

September 23, 2004, Air Liquide America assigned the contract to Air Liquide

Large Industries, US L.P. (Air Liquide US), effective January 1, 2005. Louisiana

Pigment recognized the existence of this assignment on September 30, 2004.

The original term of the contract ran through January 1, 2007. However, a

May 1, 1998 amendment extended the term through January 1, 2010, with one-year

increments to be effective thereafter until either party provided written notice of

termination. Upon written notice of termination, the contract would extend

through the remainder of that year and the next complete year. On December 13,

2010, Air Liquide US provided Louisiana Pigment with written notice that it was

terminating the contract, effective January 1, 2012.

On June 15, 2012, Louisiana Pigment filed suit against Air Liquide America

and Air Liquide US, asserting that since delivery of the January 1, 2003 price

schedule by Air Liquide America, the two entities had manipulated the delivery

meters so that the higher supplemental rate applied for what was actually normal

deliveries of oxygen and nitrogen. Louisiana Pigment further asserted that

between January 1, 2003 and January 1, 2012, Air Liquide America and Air

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Liquide US had assessed it with excessive electrical power charges based on the

categorization of the deliveries at issue in the litigation.

Air Liquide America and Air Liquide US responded to the original petition

by filing a declinatory exception of improper venue based on Section 20.1 of the

September 1, 1990 contract, which reads as follows:

This Agreement shall be governed by and construed in
accordance with the laws of Texas and shall be performed in Harris
County, Texas. It is expressly stipulated and agreed that the District
Courts of Harris County, Texas, and the Federal District Court for the
Southern District of Texas shall have exclusive jurisdiction and venue
of all proceedings based on or arising out of this Agreement.

Following a March 6, 2013 hearing, the trial court denied the exception and

certified the ruling as a final and immediately appealable judgment. On March 22,

2013, the trial court executed a judgment conforming to its ruling. Thereafter, Air

Liquide America and Air Liquide US perfected this appeal, asserting the following

assignments of error:

1. The district court erred in denying [the defendants‟] declinatory
exception of improper venue, as the parties here executed a
valid contract with an unambiguous forum-selection clause
designating Texas courts as the exclusive and mandatory venue
for actions such as this one.

2. The district court erred to the extent that it applied Louisiana
law to determine the enforceability of the contract‟s forum-
selection clause, as the contract‟s choice-of-law clause provides
that it shall be governed by and construed in accordance with
Texas law.

3. The district court erred to the extent it engaged in a conflict-of-
laws analysis under Louisiana Civil Code article 3537 to
determine what state‟s law applies to the contract at issue,
because article 3537 “applies in the absence of an effective
choice of law by the parties,” and the parties‟ effective choice
of Texas law here, as memorialized in their contract, makes
article 3537 inapplicable.

4. The district court erred to the extent it found that article 3537‟s
relative impairment test weighed in favor of application of
Louisiana law, as opposed to Texas law.
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5. The district court erred to the extent it found that Louisiana has
a strong public policy against enforcing forum-selection
agreements, despite the fact that four out of five Louisiana
Circuits have held, and the Louisiana Supreme Court has
recognized, that forum-selection agreements are prima facie
valid and enforceable in Louisiana.

(Footnotes to assignments omitted.)

OPINION

The declinatory exception of improper venue is provided for by La.Code

Civ.P. art. 925(A)(4). An appeal from a judgment denying an exception of

improper venue presents a question of law, and we review the record de novo in

order to determine whether the trial court‟s denial of the exception was legally

correct. Henry v. Anderson, 10-941 (La.App. 3 Cir. 3/9/11), 60 So.3d 1285, writ

denied, 11-1294 (La. 9/23/11), 69 So.3d 1166. The only issue before us is whether

Section 20.1 of the September 1, 1990 contract is valid and enforceable, and all of

the assignments of error address that issue. Therefore, we will consider all of the

assignments together. Additionally, for the purpose of addressing this issue, we

will refer to Air Liquide America and Air Liquide US collectively as Air Liquide.

The March 6, 2013 hearing established that Louisiana Pigment is a Delaware

limited partnership whose principal (and only) place of business is in Calcasieu

Parish; that Kronos, a Delaware corporation having a principal place of business in

Texas, is one of the partners in Louisiana Pigment; that Air Liquide has facilities in

both Louisiana and Texas; and that all billing and contract notices from Air

Liquide to Louisiana Pigment originated in Texas. The parties agreed in argument

to the trial court that except for the application of the Section 20.1, the contract

itself was voluntarily entered into and is a valid contract. Louisiana Pigment

argued to the trial court that Section 20.1 is unenforceable, and Air Liquide took

the opposite position. However, in arguing the unenforceability of the forum
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selection clause, Louisiana Pigment specifically acknowledged that it did not take

the position that it had been required to accept Section 20.1 as part of the contract

because of fraud or duress. Instead, Louisiana Pigment relied on this court‟s

decision in Thompson Tree & Spraying Service, Inc. v. White-Spunner

Construction, Inc., 10-1187 (La.App. 3 Cir. 6/1/11), 68 So.3d 1142, writ denied,

11-1417 (La. 9/30/11), 71 So.3d 290, wherein a panel of this court held that forum

selection clauses are unenforceable as being against Louisiana public policy. The

trial court followed Thompson in rejecting Air Liquide‟s exception of improper

venue.

The Thompson litigation arose from the construction of a Wal-Mart retail

store in Alexandria, Louisiana, and involved a suit for damages by a subcontractor

against a contractor. The subcontract at issue contained a clause which stated that

the subcontract had been entered into in Mobile County, Alabama, and further

provided that any litigation between the parties would be brought in the Mobile

County Circuit Court. The subcontractor brought his suit in the Ninth Judicial

District Court in Rapides Parish, Louisiana, and was met with an exception of

improper venue as well as other requests for relief from the suit. The trial court

dismissed the Louisiana Private Works Act (LPWA) claims as being untimely and

granted the exception as to the breach of contract claim and dismissed the

subcontractor‟s suit.

This court in Thompson initially reversed the trial court‟s dismissal of the

LPWA claims and then turned to the question involving enforceability of forum

selection clauses in general. In holding that all forum selection clauses are

unenforceable in this state as being against public policy, the court relied primarily

on La.Code Civ.P. art. 44(A), which provides that “[a]n objection to the venue may

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not be waived prior to the institution of the action.” In doing so, the court

acknowledged that forum selection clauses have been found to be legal and

enforceable by Louisiana courts in three situations:

There are several appellate courts which have concluded that
forum selection clauses are legal and binding in Louisiana unless the
resisting party clearly shows that the enforcement would be
unreasonable and unjust, that the clause arises from fraud or
overreaching, or that the enforcement would contravene a strong
public policy. E.g., Case Atl. Co. v. Blount Bros. Constr., Inc., 42,251
(La.App. 2 Cir. 6/20/07), 960 So.2d 1274, writ denied, 07-1541
(La.10/12/07), 965 So.2d 403.

Id. at 1151-52.

This court in Thompson further acknowledged that the Louisiana Supreme

Court pronounced forum selection clauses enforceable in Lejano v. Bandak, 97-

388 (La. 12/12/97), 705 So.2d 158, cert. denied, 525 U.S. 815, 119 S.Ct. 52

(1998), and Power Marketing Direct, Inc. v. Foster, 05-2023 (La. 9/6/06), 938

So.2d 662,1 but noted that in Lejano, the decision involved the application of

federal law in a maritime setting; and that in Power Marketing, the supreme court‟s

language on the issue was merely dictum as the supreme court was not required to

reach that issue in rendering its decision. Thus, this court concluded that “[t]he

supreme court has not addressed the issue explicitly[.]” Thompson, 68 So.3d at

1152.

Additionally, in Thompson, this court specifically addressed our previous

ruling in Calahan v. Haspel, 99-44 (La.App. 3 Cir. 5/5/99), 732 So.2d 796,

wherein a panel of this court had declared forum selection clauses generally

enforceable, although not enforceable in that particular case, given the facts before

it. The Thompson panel concluded “that the statement relating to the enforceability

1
In Power Marketing, 938 So.2d at 675, the supreme court also recognized the three
exceptions as being “that enforcement would be unreasonable or unjust, or that the clause is
invalid for such reasons as fraud or overreaching.”
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of forum selection clauses in Callahan [sic] was inaccurate.” Thompson, 68 So.3d

at 1156.

In reaching its conclusion in Thompson, this court also noted that La.R.S.

9:2779 and La.R.S. 51:1407 specifically hold forum selection clauses invalid in the

factual situations they govern.

Louisiana Revised Statutes 9:2779(A) (emphasis added) provides:

The legislature finds that, with respect to construction contracts,
subcontracts, and purchase orders for public and private works
projects, when one of the parties is domiciled in Louisiana, and the
work to be done and the equipment and materials to be supplied
involve construction projects in this state, provisions in such
agreements requiring disputes arising thereunder to be resolved in a
forum outside of this state or requiring their interpretation to be
governed by the laws of another jurisdiction are inequitable and
against the public policy of this state.

With regard to the agreements described in La.R.S. 9:2779(A), the statute further

provides that the legislature declares any contractual provision which attempts to

require an out-of-state arbitration of disputes or an interpretation of the agreement

pursuant to the laws of another jurisdiction to be “null and void and unenforceable

as against public policy[.]” La.R.S. 9:2779(B). However, the statute does contain

an exception to this public policy determination in La.R.S. 9:2779(D), which

provides that “[n]otwithstanding any other provisions of law to the contrary, the

provisions of this Section shall not apply to negotiated labor contracts.”

Louisiana Revised Statutes 51:1407(A), which is a part of the Unfair Trade

Practices and Consumer Protection Law (UTPCPL), establishes the role of the

attorney general in enforcing the UTPCPL as well as the appropriate venue for his

or her enforcement power to be implemented:

Whenever the attorney general has reason to believe that any
person is using, has used, or is about to use any method, act, or
practice declared by R.S. 51:1405 to be unlawful, he may bring an
action for injunctive relief in the name of the state against such person
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to restrain and enjoin the use of such method, act, or practice. The
action may be brought in the district court having civil jurisdiction in
any parish in which such person resides, or is domiciled or has his
principal place of business, or in any parish in which such person did
business, or, with consent of the parties, may be brought in the district
court of the parish where the state capitol is located. In the event
these district courts are not operational due to a declared state of
emergency, the action shall be brought in an operating judicial court
located closest in geographic distance to the Nineteenth Judicial
District Court in the parish of East Baton Rouge. In the event that
such person was located outside of the state, but was soliciting in the
state by mail, telephone, or any electronic communication, the action
may be brought in the district court having civil jurisdiction in the
parish in which the contact was made. It being against the public
policy of the state of Louisiana to allow a contractual selection of
venue or jurisdiction contrary to the provisions of the Louisiana Code
of Civil Procedure, no provision of any contract which purports to
waive these provisions of venue, or to waive or select venue or
jurisdiction in advance of the filing of any civil action, may be
enforced against any plaintiff in an action brought in these courts.
These courts are authorized to issue temporary restraining orders or
preliminary and permanent injunctions to restrain and enjoin
violations of this Chapter, and such restraining orders or injunctions
shall be issued without bond.

(Emphasis added.)

After identifying legislation and custom, as the two sources of law in

Louisiana; quoting from the noted jurists of our state, Justices Albert Tate, Jr. and

James L. Dennis, as well as the eminent legal professors, Professors Marcel Planiol

and A. N. Yiannopoulos, on the role of legislation and judicial opinions in the

civilian law; and after considering the role of the legislature in enacting multiple

laws addressing the same subject, the court in Thompson reiterated the basic

standard of statutory construction found in La.Civ.Code art. 9: “When a law is

clear and unambiguous and its application does not lead to absurd consequences,

the law shall be applied as written and no further interpretation may be made in

search of the intent of the legislature.” The court then stated that “[l]aws on the

same subject matter must be interpreted in reference to each other.” La.Civ.Code

art. 13. Finally, the court noted that, “[t]he courts presume that the legislature
8

„enacted the law with full knowledge of all other laws pertaining to the same

subject matter‟ and that „every provision of law was intended to serve some useful

purpose[.]” Thompson, 68 So.2d at 1154 (quoting Martin v. Safeway Ins. Co. of

La., 08-1419, p. 4 (La.App. 3 Cir. 4/15/09), 26 So.3d 777, 780 (quoting Ransome

v. Ransome, 01-2361, p. 8 (La.App. 1 Cir. 06/21/02), 822 So.2d 746, 754)).

This analysis led the court in Thompson to the application of the basic rule

provided in La.Code Civ.P. art. 44(A) that “[a]n objection to the venue may not be

waived prior to the institution of the action[,]” and the decision that all forum-

selection clauses are against Louisiana public policy. The contractor in Thompson

sought writs from the supreme court; however, as previously noted, writs were

denied. Thompson Tree & Spraying Serv., Inc. v. White-Spunner Const., Inc., 11-

1417 (La. 9/30/11), 71 So.3d 290. Since this court‟s decision in Thompson, two

decisions have been rendered in other circuits refusing to extend the language of

La.R.S. 51:1407(A) beyond the realm of Louisiana UTPCPL matters.

The first of these two cases is Rising Resources Control, Inc. v. KIE

Commodities and Finance, L.L.C., 11-1026 (La.App. 1 Cir. 12/21/11), 80 So.3d

1217, writ denied, 12-658 (La. 4/27/12), 86 So.3d 632. In this case, the plaintiff

entered into a contract with a Michigan company for the purchase of scrap metal

from the defendant‟s leased Louisiana premises. The contract included a forum

selection clause providing for venue in Michigan. The plaintiff filed suit in

Louisiana, and the defendant objected to venue. The trial court sustained the

objection and dismissed the plaintiff‟s suit. The plaintiff appealed the trial court‟s

decision, relying on Thompson, and, on appeal, the first circuit stated:

The [Thompson] court found that although the referenced public
policy language appears in the Louisiana Unfair Trade Practices Act
(UTPA), the language utilized in the statute “indicates that the policy
is far from being limited to the claims based on the UTPA.”
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Thompson Tree & Spraying Service, Inc., 10-1187 at p. 18, 68 So.3d
at 1154. The third circuit also noted that LSA-C.C.P. art. 44(A) does
not allow venue to “be waived prior to the institution of the action.”
The court further declared that its prior statement in Calahan v.
Haspel, 99-44 (La.App. 3 Cir. 5/5/99), 732 So.2d 796, that “forum
selection clauses are generally enforceable” was inaccurate.
Thompson Tree & Spraying Serv., Inc., 10-1187 at p. 22, 68 So.3d at
1156.

In contrast, this court has previously recognized a more limited
view, although recognizing that “the public policy of this state does
militate against the use of forum-selection clauses in employment
contracts, La. R.S. 23:921(A)(2), and in consumer transactions and
cases of unfair trade practices, La. R.S. 51:1407.” Vallejo Enterprise,
L.L.C.[ v. Boulder Image, Inc.], 05-2649 at p. 6 [(La.App. 1 Cir.
11/3/06)], 950 So.2d [832,] 837. However, this court did not expand
LSA-R.S. 51:1407(A) beyond its context of the UTPA and noted that
plaintiff “pointed to no authority supporting a proposition that
commercially sophisticated parties may not limit their disputes to any
forum of their choosing.” Id. This court, finding no contravention of
public policy, affirmed the trial court‟s grant of an exception of
improper venue in a suit brought by a Louisiana distributor against an
Arizona manufacturer wherein a choice of law provision required that
any suits be instituted in the state of Arizona. See also Dillon v.
Bankers Ins. Co., 09-1121, 2010 WL 502838 (La.App. 1 Cir. 2/12/10)
(unpublished opinion).

Although the third circuit has interpreted the public policy
declared in LSA-R.S. 51:1407(A) to extend beyond the context of the
UTPA to all civil proceedings, we decline to do so and follow our
prior holding in Vallejo Enterprise, L.L.C.

Id. at 1220-21.

As previously noted, the supreme court denied the plaintiff‟s application for

supervisory writs.

In Fidelak v. Holmes European Motors, L.L.C., 47,915 (La.App. 2 Cir.

2/27/13), 111 So.3d 456, an allegedly defective engine was sold by the third-party

defendant to the third-party-plaintiff automotive center. The invoice at issue stated

that the defendant‟s terms and conditions could be found on its website. Included

in these terms and conditions was a forum-selection clause which required

litigation to take place in Harris County, Texas. After the trial court sustained the

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third-party defendant‟s exception of improper venue, the third-party plaintiff

appealed, arguing, in part based on Thompson, that forum-selection clauses are

unenforceable as being against public policy. In affirming the trial court‟s grant of

the venue exception, the second circuit also declined to follow Thompson in

expanding the language of La.R.S. 51:1407(A) outside of UTPCPL claims.

Specifically, the second circuit stated:

We find that the cited statutes were intended to protect
consumers who contract from disadvantageous bargaining positions,
not to apply to all contracts of every type. To apply the prophylactic
restrictions of [UTPCPA] to the instant situation is overreaching. The
parties contracted in good faith in a commercial transaction, and a
deal is a deal.

Id. at 459.

The supreme court granted the third-party plaintiff‟s application for

supervisory writs in this matter. Fidelak v. Holmes European Motors, L.L.C., 13-

691 (La. 5/17/13), 118 So.3d 378. However, in rendering its opinion to reverse the

trial court and second circuit, the supreme court did not resolve the forum-selection

issue. Instead, the supreme court concluded that “a third party defendant may not

object to venue where the principal action has been instituted in the proper venue.”

Fidelak v. Holmes European Motors, L.L.C., 13-691, p. 1 (La. 12/10/13), 130

So.3d 851, 852. With regard to the forum-selection issue, the supreme court noted

that the issue of “[w]hether such clauses are valid under Louisiana law has never

been squarely before us[,]” but that “because of the procedural posture of this case,

it is not necessary for us to decide this difficult issue.” Id. at 853-54.

Subsequent to its decision in Fidelak, the supreme court rendered its

decision in Shelter Mutual Insurance Co. v. Rimkus Consulting Group, Inc. of

Louisiana, 13-1977 (La. 7/1/14), __ So.3d __, wherein it squarely addressed the

question of whether forum selection clauses were per se violations of public policy
11

in Louisiana. After reviewing the jurisprudence relative to such clauses, the

supreme court held that forum selection clauses are prima facie valid in Louisiana.

Specifically, the supreme court stated:

We hold that such clauses should be enforced in Louisiana unless the
resisting party can “clearly show that enforcement would be
unreasonable and unjust, or that the clause was invalid for such
reasons as fraud or overreaching . . . [or that] enforcement would
contravene a strong public policy of the forum in which suit is
brought, whether declared by statute or by judicial decision.”

Id. at ____ (quoting Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 13 92 S.Ct. 1907
(1972)).

In the matter now before us, Louisiana Pigment does not claim application

of any of the exceptions set forth above. Instead, it relies solely on the holding in

Thompson that Louisiana has a public policy against enforcement of all forum

selection clauses. That being the case, we reverse the trial court‟s denial of the

declinatory exception of improper venue and render judgment granting the

exception and dismissing the lawsuit of Louisiana Pigment. Although we normally

would allow Louisiana Pigment the opportunity to amend its petition in order to

remove the grounds pled in the exception of improper venue, such a step in this

instance would be “a vain and useless act.” Vallejo Enterprises, L.L.C., 950 So.2d

at 838. The only action that will remove Air Liquide‟s objection is a transfer to a

court of proper jurisdiction and venue. As it is impossible for this court to transfer

this matter to a Texas court, we dismiss Louisiana Pigment‟s lawsuit without

prejudice so that it may be refiled in the proper jurisdiction.

DISPOSITION

For the foregoing reasons, we reverse the trial court judgment rejecting the

declinatory exception of improper venue filed by Air Liquide America, L.P. and

Air Liquide Large Industries, US L.P. and render judgment granting the exception

12

and dismissing the lawsuit of Louisiana Pigment Company, L.P. against Air

Liquide America, L.P. and Air Liquide Large Industries, US L.P., without

prejudice. We assess all costs of this litigation to Louisiana Pigment Company,

L.P.

REVERSED AND RENDERED.

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