Michael Carl Clary, Et Ux. v. State Farm Mutual Automobile Ins. Co. Etc.
This text of Michael Carl Clary, Et Ux. v. State Farm Mutual Automobile Ins. Co. Etc. (Michael Carl Clary, Et Ux. v. State Farm Mutual Automobile Ins. Co. Etc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
16-168
MICHAEL CAL CLARY, ET UX.
VERSUS
STATE FARM MUTUAL AUTOMOBILE INS. CO., ET AL.
**********
APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2015-2657 HONORABLE G. MICHAEL CANADAY, DISTRICT JUDGE
JIMMIE C. PETERS JUDGE
Court composed of Jimmie C. Peters, James T. Genovese, and John E. Conery, Judges.
AFFIRMED.
CONERY, J., dissents and assigns reasons. Hunter W. Lundy Matthew E. Lundy Daniel A. Kramer Lundy, Lundy, Soileau & South, LLP Post Office Box 3010 Lake Charles, Louisiana 70602-3010 (337) 439-0707 COUNSEL FOR PLAINTIFFS/APPELLEES: Michael Cal Clary Catherine Ann Hixson Clary
Robert J. David, Jr. Alyse S. Richard Juneau David APLC Post Office Drawer 51268 Lafayette, Louisiana 70505-1268 (337) 269-0052 COUNSEL FOR DEFENDANTS/APPELLANTS: Gene Haymon David Haymon
Mark N. Mallery Jacob C. Credeur Ogletree, Deakins, Nash, Smoak & Stewart, P.C. 701 Poydras Street, Suite 3500 New Orleans, Louisiana 70139 (504) 648-3840 COUNSEL FOR DEFENDANTS/APPELLANTS: State Farm Mutual Automobile Ins. Co. State Farm Fire & Casualty Co. State Farm General Ins. Co. State Farm Life Ins. Co. State Farm VP Management Corp. State Farm Bank, F.S.B. Insurance Placement Services, Inc. Patrick White Kimberly Rollins White PETERS, J.
Michael Cal Clary and Catherine Ann Hixson Clary brought suit against a
number of defendants to recover damages they claim to have suffered while
acquiring and operating an insurance agency in Leesville, Vernon Parish,
Louisiana. The Clarys asserted causes of action against all of the defendants in the
litigation under a number of theories of recovery, and the various defendants filed
two separate peremptory exceptions of no cause of action seeking only the
dismissal of the damage claims arising pursuant to the Louisiana Antitrust Statute,
La.R.S. 51:122 (the antitrust statute), and the Louisiana Unfair Trade Practices Act,
La.R.S. 51:1401, et seq. (LUTPA). The trial court rejected both exceptions, and
the defendants appealed. For the following reasons, we affirm the trial court
judgment in all respects.
PROCEDURAL STATUS OF THE LITIGATION
The Clarys, who are husband and wife, filed the petition at issue on July 2,
2015. In their petition, they named State Farm Mutual Automobile Insurance
Company, State Farm Fire and Casualty Company, State Farm General Insurance
Company, State Farm Life Insurance Company, State Farm VP Management
Corporation, and State Farm Bank, F.S.B. (collectively referred to as “State 1 Farm”); Insurance Placement Services, Inc. (Insurance Placement Services);
Patrick White; Kimberly Rollins White (sometimes referred to as “Kimberly 2 Rollins”); Gene Haymon; and David Haymon as defendants.
1 The petition refers to State Farm in general and does not always designate which individual State Farm entity is currently being referenced. Thus, when we use the term “State Farm” we use it in the same sense as the Clarys in their petition, as a general reference to whatever State Farm entity is being represented at the time. 2 At some time during the pendency of this litigation, Patrick White and Kimberly Rollins were married. On August 19, 2015, State Farm, Insurance Placement Services, Patrick
White, and Kimberly Rollins White (the State Farm appellants) filed a peremptory
exception of no cause of action addressing the claims asserted by the Clarys
involving the antitrust statute and LUTPA. Two days later, Gene and David
Haymon (the Haymon appellants) filed a peremptory exception of no cause of
action addressing the same two claims.
At the end of a December 16, 2015 hearing on both exceptions, the trial
court took the matter under advisement. On January 12, 2016, the trial court
executed a written judgment rejecting both exceptions. The written judgment also
contains the following reasons for the trial court‟s actions:
After reviewing the facts and relevant case law, the Court finds as follows:
If all alleged facts are taken as true, the Petition states all the necessary elements of a violation of both the Louisiana antitrust law and the Louisiana Unfair Trade Practices Act. Therefore, Plaintiffs‟ Petition states a cause of action.
While the Court does believe the Plaintiffs have stated a cause of action for both alleged violations, the Court also notes Everything on Wheels Subaru, Inc. v. Subaru S., Inc., “if there are two or more items of damages or theories of recovery which arise out of the operative facts of a single transaction or occurrence, a partial judgment on an exception of no cause of action should not be rendered to dismiss one item of damages or theory of recovery.” 616 So. 2d 1234 (La. 1993).
Both the State Farm appellants and the Haymon appellants timely complied 3 with the expedited appeal provisions of La.R.S. 51:134. In their separately filed
appeals, the State Farm appellants and the Haymon appellants questioned only the
trial court‟s ruling on the exceptions of no cause of action addressing the Clarys‟
antitrust claim. However, in the briefs submitted on appeal, both groups of
3 The denial of a defendant‟s peremptory exception of no cause of action is not normally appealable as it is not identified as one of those judgments appealable pursuant to La.Code Civ.P. art. 1915. However, La.R.S. 51:134-35 provides an expedited appeal for certain interlocutory judgments rendered in antitrust litigation. 2 appellants joined the LUTPA issue in their assignments of error. While phrased
slightly differently, the two appellant groups raised the same assignments of error:
(1) the trial court erred in concluding that it could not grant an exception of no
cause of action that dismissed some, but not all, of the Clarys‟ claims; (2) the trial
court erred when it rejected the exceptions of no cause of action addressing the
Clarys‟ claims under La.R.S. 51:122; and (3) the trial court erred when it rejected
the exceptions of no cause of action addressing the Clarys‟ claims under LUTPA.
FACTUAL ALLEGATIONS OF THE CLARYS’ PETITION (ACCEPTING THE WELL-PLEADED FACTUAL ALLEGATIONS TO BE TRUE)
In their twenty-four page petition, the Clarys sought damages against the
defendants based on a number of causes of action, including breach of contract;
detrimental reliance in contract; conspiracy in restraint of trade in violation of the
antitrust statute; violations of LUTPA; intentional infliction of emotional distress,
and conspiracy to intentionally inflict emotional distress; conspiracy to punish the
Clarys for filing a complaint with the Louisiana Department of Insurance
(Insurance Department), i.e., being a “whistleblower”; breach of contractual
stipulation pour autri; and loss of consortium. All of these causes of action arise
from the same factual background. Still, the only two at issue in this appeal are the
antitrust and LUTPA causes of action.
The petition establishes that before contracting with State Farm to take over
one of its agencies in Leesville, Louisiana, Mr. Clary had been a successful
independent owner of an Allstate Insurance agency. The transition from one
company to the other began in 2006 when a State Farm agency manager
encouraged him to become a State Farm Insurance Agent. Between 2007 and 2011,
Mr. Clary began training within the State Farm system; and given his successful
Free access — add to your briefcase to read the full text and ask questions with AI
STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
16-168
MICHAEL CAL CLARY, ET UX.
VERSUS
STATE FARM MUTUAL AUTOMOBILE INS. CO., ET AL.
**********
APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2015-2657 HONORABLE G. MICHAEL CANADAY, DISTRICT JUDGE
JIMMIE C. PETERS JUDGE
Court composed of Jimmie C. Peters, James T. Genovese, and John E. Conery, Judges.
AFFIRMED.
CONERY, J., dissents and assigns reasons. Hunter W. Lundy Matthew E. Lundy Daniel A. Kramer Lundy, Lundy, Soileau & South, LLP Post Office Box 3010 Lake Charles, Louisiana 70602-3010 (337) 439-0707 COUNSEL FOR PLAINTIFFS/APPELLEES: Michael Cal Clary Catherine Ann Hixson Clary
Robert J. David, Jr. Alyse S. Richard Juneau David APLC Post Office Drawer 51268 Lafayette, Louisiana 70505-1268 (337) 269-0052 COUNSEL FOR DEFENDANTS/APPELLANTS: Gene Haymon David Haymon
Mark N. Mallery Jacob C. Credeur Ogletree, Deakins, Nash, Smoak & Stewart, P.C. 701 Poydras Street, Suite 3500 New Orleans, Louisiana 70139 (504) 648-3840 COUNSEL FOR DEFENDANTS/APPELLANTS: State Farm Mutual Automobile Ins. Co. State Farm Fire & Casualty Co. State Farm General Ins. Co. State Farm Life Ins. Co. State Farm VP Management Corp. State Farm Bank, F.S.B. Insurance Placement Services, Inc. Patrick White Kimberly Rollins White PETERS, J.
Michael Cal Clary and Catherine Ann Hixson Clary brought suit against a
number of defendants to recover damages they claim to have suffered while
acquiring and operating an insurance agency in Leesville, Vernon Parish,
Louisiana. The Clarys asserted causes of action against all of the defendants in the
litigation under a number of theories of recovery, and the various defendants filed
two separate peremptory exceptions of no cause of action seeking only the
dismissal of the damage claims arising pursuant to the Louisiana Antitrust Statute,
La.R.S. 51:122 (the antitrust statute), and the Louisiana Unfair Trade Practices Act,
La.R.S. 51:1401, et seq. (LUTPA). The trial court rejected both exceptions, and
the defendants appealed. For the following reasons, we affirm the trial court
judgment in all respects.
PROCEDURAL STATUS OF THE LITIGATION
The Clarys, who are husband and wife, filed the petition at issue on July 2,
2015. In their petition, they named State Farm Mutual Automobile Insurance
Company, State Farm Fire and Casualty Company, State Farm General Insurance
Company, State Farm Life Insurance Company, State Farm VP Management
Corporation, and State Farm Bank, F.S.B. (collectively referred to as “State 1 Farm”); Insurance Placement Services, Inc. (Insurance Placement Services);
Patrick White; Kimberly Rollins White (sometimes referred to as “Kimberly 2 Rollins”); Gene Haymon; and David Haymon as defendants.
1 The petition refers to State Farm in general and does not always designate which individual State Farm entity is currently being referenced. Thus, when we use the term “State Farm” we use it in the same sense as the Clarys in their petition, as a general reference to whatever State Farm entity is being represented at the time. 2 At some time during the pendency of this litigation, Patrick White and Kimberly Rollins were married. On August 19, 2015, State Farm, Insurance Placement Services, Patrick
White, and Kimberly Rollins White (the State Farm appellants) filed a peremptory
exception of no cause of action addressing the claims asserted by the Clarys
involving the antitrust statute and LUTPA. Two days later, Gene and David
Haymon (the Haymon appellants) filed a peremptory exception of no cause of
action addressing the same two claims.
At the end of a December 16, 2015 hearing on both exceptions, the trial
court took the matter under advisement. On January 12, 2016, the trial court
executed a written judgment rejecting both exceptions. The written judgment also
contains the following reasons for the trial court‟s actions:
After reviewing the facts and relevant case law, the Court finds as follows:
If all alleged facts are taken as true, the Petition states all the necessary elements of a violation of both the Louisiana antitrust law and the Louisiana Unfair Trade Practices Act. Therefore, Plaintiffs‟ Petition states a cause of action.
While the Court does believe the Plaintiffs have stated a cause of action for both alleged violations, the Court also notes Everything on Wheels Subaru, Inc. v. Subaru S., Inc., “if there are two or more items of damages or theories of recovery which arise out of the operative facts of a single transaction or occurrence, a partial judgment on an exception of no cause of action should not be rendered to dismiss one item of damages or theory of recovery.” 616 So. 2d 1234 (La. 1993).
Both the State Farm appellants and the Haymon appellants timely complied 3 with the expedited appeal provisions of La.R.S. 51:134. In their separately filed
appeals, the State Farm appellants and the Haymon appellants questioned only the
trial court‟s ruling on the exceptions of no cause of action addressing the Clarys‟
antitrust claim. However, in the briefs submitted on appeal, both groups of
3 The denial of a defendant‟s peremptory exception of no cause of action is not normally appealable as it is not identified as one of those judgments appealable pursuant to La.Code Civ.P. art. 1915. However, La.R.S. 51:134-35 provides an expedited appeal for certain interlocutory judgments rendered in antitrust litigation. 2 appellants joined the LUTPA issue in their assignments of error. While phrased
slightly differently, the two appellant groups raised the same assignments of error:
(1) the trial court erred in concluding that it could not grant an exception of no
cause of action that dismissed some, but not all, of the Clarys‟ claims; (2) the trial
court erred when it rejected the exceptions of no cause of action addressing the
Clarys‟ claims under La.R.S. 51:122; and (3) the trial court erred when it rejected
the exceptions of no cause of action addressing the Clarys‟ claims under LUTPA.
FACTUAL ALLEGATIONS OF THE CLARYS’ PETITION (ACCEPTING THE WELL-PLEADED FACTUAL ALLEGATIONS TO BE TRUE)
In their twenty-four page petition, the Clarys sought damages against the
defendants based on a number of causes of action, including breach of contract;
detrimental reliance in contract; conspiracy in restraint of trade in violation of the
antitrust statute; violations of LUTPA; intentional infliction of emotional distress,
and conspiracy to intentionally inflict emotional distress; conspiracy to punish the
Clarys for filing a complaint with the Louisiana Department of Insurance
(Insurance Department), i.e., being a “whistleblower”; breach of contractual
stipulation pour autri; and loss of consortium. All of these causes of action arise
from the same factual background. Still, the only two at issue in this appeal are the
antitrust and LUTPA causes of action.
The petition establishes that before contracting with State Farm to take over
one of its agencies in Leesville, Louisiana, Mr. Clary had been a successful
independent owner of an Allstate Insurance agency. The transition from one
company to the other began in 2006 when a State Farm agency manager
encouraged him to become a State Farm Insurance Agent. Between 2007 and 2011,
Mr. Clary began training within the State Farm system; and given his successful
training, he initially received offers to take over State Farm agency offices in either 3 Ville Platte, Louisiana, or Port Arthur, Texas. However, he declined these offers
based partially on the advice of Kimberly Rollins, State Farm‟s vice-president of
the division overseeing its Louisiana agencies. Ms. Rollins suggested that he wait
for a better opportunity in Louisiana.
In February of 2011, Mr. Clary thought he had found that better opportunity
when he was asked to take over Gene Haymon‟s State Farm agency in Leesville,
Louisiana. Todd McFarland, a State Farm Agency Field Executive, contacted Mr.
Clary about taking over the Leesville agency because Gene Haymon was retiring.
Being aware that Gene Haymon‟s son, David Haymon, was a State Farm
Agency Field Executive in Columbia, Missouri, and being concerned that he might
be interested in moving into an agency position in Leesville to take advantage of
his father‟s reputation, Mr. Clary sought assurances from Mr. McFarland that his
taking over Gene Haymon‟s agency would be free and clear of any interference
from either of the Haymons. Mr. McFarland responded by stating that neither he
nor State Farm would tolerate “illegal solicitation, policy raiding, or mass transfer
from a new agent‟s book of business[.]” With this assurance, Mr. Clary agreed to
take the Leesville opportunity and began the transfer process.
State Farm awarded Mr. Clary the agency, but he soon learned that State
Farm had also awarded David Haymon a Leesville agency. When Jamie Eagles
replaced Mr. McFarland as State Farm‟s Agency Field Executive in June of 2011,
he called a meeting of the parties in an effort to circumvent any problems
associated with the soon-to-be competing Leesville agencies. At the July 17, 2011 4 meeting, the topic of discussion was the transition of Gene Haymon‟s business to
the new agencies. In addressing that subject, Mr. Eagles reminded the two agents
of State Farm‟s lack of tolerance for the solicitation of another agent‟s customers
4 The meeting was attended by Mr. Eagles, Mr. Clary, David Haymon, and Ms. Rollins. 4 and threatened that anyone found violating the policy would have his agent‟s
agreement with State Farm cancelled. This warning apparently had no effect on
David Haymon, because as early as October of 2011 he was in Leesville soliciting
policies without having yet obtained a Louisiana insurance license.
Mr. Clary executed a standard State Farm agency agreement (referred to as a
“TICA Agreement”) in January of 2012, and began operating Gene Haymon‟s
former agency in Leesville. At the same time, he and David Haymon split the
book of business formerly belonging to Gene Haymon‟s agency in accordance with
the rules governing such situations. However, immediately thereafter Mr. Clary
recognized that the promises of Mr. McFarland and Mr. Eagles concerning
safeguards in dividing the business of the agency had not been put in place to give
proper notice to the clients, as they were expressing increased dissatisfaction at
being shuffled between the two agencies. The reason for the dissatisfaction
became more apparent when Mr. Clary learned that Gene and David Haymon had
provided all of Gene Haymon‟s clients with a document stating that David
Haymon was taking over all of his father‟s business and providing the clients with
instructions on how to retrieve their files from Mr. Clary.
Within the first month of operation, Mr. Clary complained to State Farm
about the Haymons‟ violation of State Farm‟s policy, and Mr. Eagles called 5 another meeting for February 1, 2012. Instead of confronting David Haymon with
his prohibited activity, Mr. Eagles merely reminded both sides of the previous
understanding concerning the splitting of Gene Haymon‟s agency. When Mr.
Eagles gave David Haymon no ultimatum concerning ceasing such activity, Mr.
Clary threatened to report him to the Insurance Department. Ms. Rollins
5 This time, Mr. White and Lindsey Cutler, both State Farm Agency Field Consultants, joined Mr. Eagles, Mr. Clary, David Haymon, and Ms. Rollins. 5 immediately responded to that threat by discouraging him from doing so and by
assuring him that reporting the Haymons‟ activities to her was sufficient and the
activities would be addressed. David Haymon did agree in the meeting to transfer
five hundred automobile policies to Mr. Clary and to State Farm‟s suggestion that
Mr. Clary be given the books of business of another agent who was expected to
retire in the immediate future.
After the meeting, and as soon as he realized that State Farm was not going
to force him to comply with any part of its policies designed to protect agents and
agencies, David Haymon ceased transferring any automobile policies to Mr. Clary.
This refusal to comply with the terms of the agreement created “mass chaos”
among Mr. Clary‟s policy holders, and as of June 20, 2012, he had lost over half of
those few customers David Haymon had transferred pursuant to the agreement.
The Haymons‟ anticompetitive behavior not only continued over the next
twenty-four months, but accelerated. In May of 2012, Mr. Clary learned that
David Haymon had lied to potential clients, telling them that Mr. Clary was
holding customers against their will and that he and his father were going to put Mr.
Clary out of business. Instead of supporting him when he relayed this information
to her, Ms. Rollins told Mr. Clary to quit discussing the transfers and solicitations
and move on past the controversy. In the months that followed, the Haymons told
Mr. Clary‟s clients that he had stolen files from the old Haymon agency, spread the
rumor that Mr. Clary was going bankrupt, and informed everyone who would
listen that Mr. Clary would not be a State Farm agent for long. In fact, at one point,
Gene Haymon stood up in church, called Mr. Clary a liar and thief, and told those
present that he expected the members to support his son.
Not only did State Farm not support Mr. Clary in the conflict with the
Haymons, but it took steps to make matters difficult in the long-term operation of 6 his agency. The TICA Agreement Mr. Clary first executed provided for an initial
term running through January 31, 2013, and Mr. Clary had executed it in 6 contemplation of executing an AAO5 contract effective January 1, 2013. 7 However, at a November 29, 2012 meeting, Mr. White recapped the problems of
the past few months and acknowledged that none were Mr. Clary‟s fault, but stated
that State Farm wanted to extend the TICA Agreement rather than enter into an
AAO5 contract in January 2013. Mr. White assured Mr. Clary that the new TICA
Agreement was the same as he had previously signed, and that it would
automatically convert to an AAO5 contract during the first quarter of 2013. Based
on these assurances, Mr. Clary executed the new TICA Agreement on December
17, 2012. However, for first one reason and then another, State Farm delayed
approval of Mr. Clary‟s AAO5 contract until January 1, 2014.
Through these first two years of operation, Mr. Clary had nothing which
could explain why State Farm had such a tolerant attitude toward the Haymons.
However, the picture became more clear when he attended a training session with
other agents. In conversations with other agents at the training session, he learned
why Gene and David Haymon could act with impunity when it came to violating
State Farm‟s procedures and policies. According to the agents he spoke with,
Gene Haymon had bragged about his power at a recent social event.
From what he was told about Gene Haymon‟s comments, Mr. Clary
discovered that before he came into the picture, Gene Haymon thought he had “cut
a deal” with Ms. Rollins to give his son the entirety of his agency when he retired;
but that the “deal” was actually to benefit Mr. White and Ms. Rollins, who were
6 The difference between the two contracts is that the TICA Agreement is for a set term and the AAO5 contract is a lifetime agreement. 7 This meeting was attended by Mr. White, Lindsey Cutler, and Cliff Orso, Jr., a State Farm Development Agency Field Consultant. 7 romantically involved. Gene Haymon explained that when his son vacated his
Missouri Agency Field Executive position, an individual in Oklahoma holding a
Development Agency Field Consultant position replaced him. Mr. White then
assumed the open Oklahoma Development Agency Field Consultant position, and
Ms. Rollins had that position transferred to Baton Rouge, Louisiana, where she
resided. Soon thereafter, Mr. White and Ms. Rollins were married.
Gene Haymon told the agents that when he became aware of the real
purpose of the transfers, he used that information to gain the upper hand over Mr.
White and Ms. Rollins, causing them to overlook his and his son‟s raiding of Mr.
Clary‟s policies and their spreading of lies against him in the community. Gene
Haymon further bragged that he was able to include two senior State Farm officials
in the conspiracy by threatening to expose their involvement in illegal and 8 unethical activities if they did not “take care of his daughter and his son.”
As the personal attacks and dishonest business methods continued, Mr.
Clary sought assistance from a Christian counselor who encouraged him to report
the situation to the Insurance Department. Following that advice, he met with Jim
Donelon, the Louisiana Commissioner of Insurance, and Barry Ward, the
Louisiana Deputy Commissioner of Licensing and Compliance, on December 3,
2013. In that meeting, he lodged a complaint against Gene and David Haymon,
asserting that they had violated state law in operating an insurance agency without
a state license and they had committed unfair trade practices. Mr. Ward‟s
subsequent investigation of the complaint revealed that the Leesville situation was
common knowledge within the State Farm organization.
The inquiry by Mr. Ward prompted Kevin Garrett, State Farm‟s Central
Louisiana Sales Leader, to come to Mr. Clary‟s office on July 13, 2014. In the
8 Gene Haymon‟s daughter is a State Farm agent residing in Arkansas. 8 conversation of that day, Mr. Garrett informed Mr. Clary that there was great
concern within the State Farm organization arising from his report to the Insurance
Department and that State Farm now had a “trust issue” with him. Mr. Garrett
informed him that State Farm has no “black and white” process for handling
disputes between agencies, and simply operates in the “gray.” He further
suggested that Mr. Clary‟s action could cause State Farm to declare him ineligible
for policy assignments in the future because executives such as he could act
subjectively toward agents without considering any underlying factors. Mr. Clary
found these statements to be threatening and totally contrary to everything he had
been told by State Farm representatives in the past, and he expressed to Mr. Garrett
his displeasure in being punished because he had reported two individuals who
were breaking the law. 9 On August 19, 2014, Mr. Clary met with Reggie Gallant in New Orleans,
Louisiana. Mr. Clary quickly recognized that Mr. Gallant was only interested in
reprimanding him for having made a complaint to the Insurance Department. Mr.
Gallant told Mr. Clary that, despite illegal activity on the part of the Haymons,
State Farm wanted the entire matter to remain an internal State Farm affair. Mr.
Clary expressed disagreement with State Farm‟s position as expressed by Mr.
Gallant. As the meeting progressed, it became clear to Mr. Clary that Mr.
Gallant‟s objective was to chastise him in hopes that he would resign as a State
Farm agent, or in the alternative, drive him out of business. The meeting ended
without considering any solutions to the difficulties caused by the Haymons.
However, Mr. Gallant made it clear that State Farm would not tolerate Mr. Clary
9 Mr. Gallant was described as a both a State Farm Regional vice-president and the vice- president of the Sales Representative Division overseeing State Farm‟s Louisiana agencies. 9 making complaints involving other agents or State Farm employees to the
Insurance Department as State Farm reserved that right for itself.
SPECIFIC PLEADINGS ADDRESSING THE CAUSES OF ACTION AT ISSUE
In additional to the factual basis previously set forth herein, the Clarys‟
pleadings summarize and particularly describe their antitrust cause of action with
the following paragraphs:
48.
The conspiracy effected between DAVID HAYMON, GENE HAYMON, KIMBERLY ROLLINS, PATRICK WHITE and other STATE FARM officials caused the restraint of trade of MIKE CLARY and injured his ability to perform the STATE FARM marketing services in the Leesville community. Defendants‟ conduct clearly had an adverse effect on MIKE CLARY‟s ability to compete in the Leesville market. As effected, the conspiracy by these Defendants to deny MIKE CLARY the opportunity to service accounts and acquire new accounts with STATE FARM products caused MIKE CLARY to lose more than half of the estimated accounts that he was told he would have when he opened his agency, and has denied MIKE CLARY of the opportunity to accrue benefits from the beginning of January 2012 through the present and has resulted in the loss of many policies.
49.
The conspiracy among the Defendants harmed consumers by ensuring they received false information which consumers relied upon to select their insurance agents, by depriving customers of the benefits of their choice of insurance agents; and by exposing private information of consumers to those not licensed as insurance agents in Louisiana.
With regard to their LUTPA claim in particular, the Clarys‟ pleadings
summarize and particularly describe their antitrust cause of action with the
following paragraphs:
51.
The STATE FARM Defendants and their employees‟ actions against MIKE CLARY constitute unfair trade practices under La. R.S. 51:1405(a) in that their methods of competition, deceptive acts, and practices were unfair and unscrupulous. The Louisiana Unfair Trade 10 Practices Act (“LUTPA”) is patterned after the Federal Trade Commission Act and prohibits the same type of deceptive and anti- competitive conduct is prohibited by the Federal Trade Commission Act.
52.
GENE HAYMON‟s acts of telling lies about MIKE CLARY, soliciting policies of MIKE CLARY and threatening other STATE FARM officials if they failed to assist his son, DAVID HAYMON, all constitute unfair trade practices.
53.
DAVID HAYMON‟s actions of sending out letters contrary to his contract with STATE FARM, which contained false and misleading information, particularly that these were his policies, and that STATE FARM was endorsing his letter, was clearly unfair and deceptive acts under the LUTPA.
54.
Defendants DAVID HAYMON, KIMBERLY ROLLINS and PATRICK WHITE‟s actions in manipulating jobs and positions to appease GENE HAYMON so his son, DAVID HAYMON could take over GENE HAYMON‟s STATE FARM agency and give up his AFE position in Missouri; along with KIMBERLY ROLLINS and PATRICK WHITE participating in the strategic maneuvering in order to help DAVID HAYMON take his father‟s STATE FARM agency and policies, deny MIKE CLARY his promised book of business, and to enable PATRICK WHITE and KIMBERLY ROLLINS to continue to work for STATE FARM in the same city and live in the same residence was unethical, unscrupulous and deceptive, all in violation of LUTPA.
55.
As recently as June, 2015, STATE FARM has denied and cutoff MIKE CLARY from access to and use of STATE FARM‟s computer based business development leads which historically have been available to all STATE FARM agents. When questioned by MIKE CLARY, Kevin Garrett of STATE FARM was unable or refused to explain why MIKE CLARY could no longer access these business development leads ostensibly available to all STATE FARM agents.
OPINION
The function of the peremptory exception of no cause of action as authorized
by La.Code Civ.P. art. 927(A)(5) is to “test the legal sufficiency of the petition by 11 determining whether the law affords a remedy on the facts” that are alleged in the
petition. Everything on Wheels Subaru, Inc. v. Subaru S., Inc., 616 So.2d 1234,
1235 (La.1993). “No evidence may be introduced at any time to support or
controvert the objection that the petition fails to state a cause of action.” La.Code
Civ.P. art. 931. As stated in Industrial Cos., Inc. v. Durbin, 02-665, p. 7 (La.
1/28/03), 837 So.2d 1207, 1213, “[e]very reasonable interpretation must be
accorded the language of the petition in favor of maintaining its sufficiency and
affording the plaintiff the opportunity of presenting evidence at trial.”
Because the peremptory exception of no cause of action “raises a question of
law and the lower court‟s decision is necessarily based solely on the sufficiency of
the petition[,]” we review the grant of the exception under a de novo standard.
State, Div. of Admin., Office of Facility Planning & Control v. Infinity Sur. Agency,
L.L.C., 10-2264, p. 9 (La. 5/10/11), 63 So.3d 940, 946. Additionally, “for the
purposes of determining the issues raised by the exception, the well-pleaded facts
in the petition must be accepted as true. Simply, if the petition alleges sufficient
facts to establish a case cognizable in law, an exception of no cause of action must
fail.” Jones v. Tezeno, 99-1693, p. 4 (La.App. 3 Cir. 3/1/00), 758 So.2d 896, 899
(citations omitted).
Although “Louisiana is a fact pleading state” that does not mean that a
plaintiff must “set forth every possible theory of recovery[.]” State ex rel. Ieyoub
v. Racetrac Petroleum, Inc., 01-458, p. 5 (La.App. 3 Cir. 6/20/01), 790 So.2d 673,
678 (internal quotation marks omitted). Instead, the plaintiff “must set forth the
facts of his claim.” Id. At the same time, “to reach the truth, and to avoid the
application of harsh, technical rules of pleading; at a minimum, the plaintiff must
plead bare bone facts, which if taken as true, state a cause of action.” Id.
12 Assignment of Error Number One
In their first assignments of error, the State Farm appellants and the Haymon
appellants both argue that the trial court erred when it inserted the following
language in its judgment.
While the Court does believe the Plaintiffs have stated a cause of action for both alleged violations, the Court also notes Everything on Wheels Subaru, Inc. v. Subaru S., Inc., “if there are two or more items of damages or theories of recovery which arise out of the operative facts of a single transaction or occurrence, a partial judgment on an exception of no cause of action should not be rendered to dismiss one item of damages or theory of recovery. 616 So. 2d 1234 (La. 1993).
Specifically, they argue that the Louisiana Legislature legislatively overruled the
holding in Everything on Wheels, 616 So.2d 1234, in 2003 when it amended
La.Code Civ.P. art. 934 to read as follows:
When the grounds of the objection pleaded by the peremptory exception may be removed by amendment of the petition, the judgment sustaining the exception shall order such amendment within the delay allowed by the court. If the grounds of the objection raised through the exception cannot be so removed, or if the plaintiff fails to comply with the order to amend, the action, claim, demand, issue, or theory shall be dismissed.
While we find the trial court‟s statement in its judgment with regard to the holding
of the supreme court in the Everything on Wheels decision to be erroneous, we note
that it is mere dicta and, therefore, harmless error. Specifically, the trial court
made it clear that the Clarys stated a cause of action for both the antitrust claim and
the LUTPA claim, and that the decision in Everything on Wheels did not affect its
ultimate judgment.
Assignment of Error Number Two
In this assignment of error, the State Farm appellants and the Haymon
appellants argue that the trial court erred in rejecting their peremptory exceptions
13 of no cause of action as it related to the Clarys‟ antitrust claim under La.R.S.
51:122.
Louisiana Revised Statutes 51:122(A) provides that “[e]very contract,
combination in the form of trust or otherwise, or conspiracy, in restraint of trade or
commerce in this state is illegal.” Furthermore, both “[t]he federal and state
antitrust laws were intended to be sweeping in breadth, encompassing every
conspiracy, contract or combination that restrains trade.” Plaquemine Marine, Inc.
v. Mercury Marine, 03-1036, p. 9 (La.App. 1 Cir. 7/25/03), 859 So.2d 110, 118. In
order to assert a claim under La.R.S. 51:122, a plaintiff must assert that the activity
purporting to violate the statute must result “in an unreasonable restraint of trade.”
Id. At the same time, “[n]ot every business arrangement that restrains trade in
some manner is illegal[.]” Id.
Claims of restraints against trade fall into two categories: horizontal or
vertical. “Horizontal combinations are those between competitors that restrain
enterprises at the same level of distribution. Vertical combinations, on the other
hand, are imposed by persons at different levels of distribution, usually by one
higher up the distribution chain than the party restrained.” Id. at 117-18. In the
matter before us, the parties agree that the Clarys‟ claim is that of a vertical
restraint against trade. “When a vertical conspiracy is alleged, plaintiffs must
show that the restraint of trade violates the „rule of reason.‟ Under this rule, the
fact-finder weighs all of the circumstances of a case in deciding whether a
restrictive practice should be prohibited as imposing an unreasonable restraint on
competition.” Id. at 118.
With regard to the burden of proof in a claim requiring a rule of reason
analysis, “both federal and Louisiana law requires proof of three elements: that the
defendants (1) engaged in a conspiracy (2) that restrained trade or injured 14 competition (3) in a particular market.” Van Hoose v. Gravois, 11-976, p. 8
(La.App. 1 Cir. 7/7/11), 70 So.3d 1017, 1022.
The Clarys assert a conspiracy between an individual no longer affiliated
with State Farm (Gene Haymon), a current State Farm agent (David Haymon), two
State Farm regional executives (Patrick White and Kimberly Rollins), and a
number of State Farm entities having supervision of all of the other defendants
except Gene Haymon. Accepting the well-pleaded allegations of the Clarys‟
petition to be true, we find the pleadings establish that State Farm recruited Mr.
Clary to be a State Farm agent and ultimately offered him Gene Haymon‟s
Leesville, Louisiana, agency upon Gene Haymon‟s retirement. Thereafter, Gene
Haymon and the remaining defendants conspired to interfere with Mr. Clary‟s
takeover of the agency by allowing the Haymons to threaten, lie to, and encourage
clients in the Leesville community to transfer their policies away from Mr. Clary in
an effort, not only to move the business to David Haymon‟s new agency, but to
drive Mr. Clary out of business. State Farm, through its field agents and
executives, not only condoned the Haymons‟ activities, but joined in the efforts.
We find that the pleadings, when taken as true, establish a conspiracy among the
various defendants.
With regard to the restrained trade or injured competition element of an
antitrust cause of action, we first recognize that “antitrust laws are for the
protection of competition[,]” and “[a] claim under LSA-R.S. 51:122 must include
an allegation of damage to competition.” Plaquemine Marine, Inc., 859 So.2d at
118. Furthermore, La.R.S. 51:122 is “virtually identical” to the corresponding
section “of the Sherman Antitrust Act, 15 U.S.C. § 1 et seq., and federal analysis of
the Sherman Antitrust Act is persuasive, though not controlling.” Id. at 117.
15 The importance of the assertion of damage to competition in an antitrust
claim was explained in JetAway Aviation, LLC v. Board of County Commissioners
of County of Montrose, Colorado, 754 F.3d 824, 835 (10th Cir. 2014), wherein the
federal appeals court explained that “the Sherman Act is not concerned with overly
aggressive business practices, or even conduct that is otherwise illegal, so long as it
does not unfairly harm competition.” The fact that other state and federal laws
govern this otherwise offensive and/or illegal activity explains the lack of concern
expressed in the antitrust legislation.
Thus, consonant with the Sherman Act‟s statutory concerns, “[t]he antitrust injury requirement ensures that a plaintiff can recover only if [its injury] stems from a competition-reducing aspect or effect of the defendant‟s behavior.” Elliott Indus. [Ltd. P’ship v. BP Am. Prod. Co.], 407 F.3d [1091,] 1124-25 [10th Cir. 2005] (first alteration in original) (quoting Atl. Richfield Co. [v. USA Petroleum Co.], 495 U.S. [328,] 344, 110 S.Ct. 1884[, 1894 (1990)]) (internal quotation marks omitted)[.]
Id. (first and second alternation in original).
Thus, no matter how egregious the facts giving rise to the claim of conspiracy, if
the petition fails to allege a corresponding injury to competition or restraint of
specific trade activity, the claimant fails to state a cause of action for damages
under La.R.S. 51:122.
The Clarys thread the general effect on competition through the pleading
setting forth the factual basis. Specifically, the conspiratorial activities not only
caused the Clarys personal injury, but it also created “mass chaos” among the
policy holders who did not know how to respond to the lies and misinformation
being spread by the Haymons; and while the conspiracy was aimed at disrupting
Mr. Clary‟s ability to function as a State Farm agent, it also had the effect of
depriving clients and potential clients of the protections afforded them in making
personal insurance decisions. Clearly, the Clarys‟ injury arises from actions by the
16 defendants that have the effect of reducing competition in the insurance field. We
find that the pleadings, when taken as true, establish that the conspiratorial
activities of the defendants restrained trade and injured competition.
Finally, the pleadings must establish a particular market affected by the
conspiratorial activity.
Under the rule of reason, as applied to Sherman Act cases, proof that a defendant‟s activities adversely affected competition in the appropriate product and geographic markets is essential to recovery. Doctor’s Hospital of Jefferson, Inc. v. Southeast Medical Alliance, Inc., 123 F.3d 301, 307 (5th Cir.1997). The relevant market has both geographic dimensions and product dimensions. Domed Stadium Hotel, Inc. v. Holiday Inns, Inc., 732 F.2d 480, 487 (5th Cir.1984). The relevant market includes a geographic market, which is the section of the country in which sellers of a particular product operate, as well as the product market, which encompasses the differences among various commodities and the willingness of buyers to substitute one product for another. Plaquemine Marine, Inc., 859 So.2d at 120. A proposed product market must include all commodities reasonably interchangeable by consumers for the same purposes. United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395, 76 S.Ct. 994, 100 L.Ed.2d 1264 (1956). The market is established by examining the substitutes that a consumer might employ and the extent to which consumers will change their consumption of one product in response to a price change in another, i.e., the cross-elasticity of demand. Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 469, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992).
HPC Biologicals, Inc. v. UnitedHealthcare of La., Inc., 16-585, p. 10 (La.App. 1 Cir. 5/26/16), 194 So.3d 784, 794.
The pleadings, when accepted as true, reflect that the conspiratorial activities
of the defendants restrained Mr. Clary and injured his ability to perform State Farm
marketing services in the Leesville community and the Leesville insurance market.
Not only was his ability to service accounts of the agency he took over harmed, but
the same could be said for his ability to acquire new accounts. The lies and
misinformation spread within the community prevented consumers from making
informed decisions with regard to their insurance needs, and some of the
information they were provided was from a yet-to-be licensed agent. Accepting 17 the pleadings as true, we find that the Clarys did establish that the conspiratorial
activities of the defendants restrained trade and injured competition with a product
and geographical market of Leesville, Louisiana.
Considering the record before us, we find that the Clarys‟ pleadings state a
cause of action for a violation of La.R.S. 51:122. Therefore, we find no merit in
this assignment of error.
Assignment of Error Number Three
In this assignment of error, the State Farm appellants and the Haymon
appellants argue that the trial court erred in rejecting their peremptory exception of
no cause of action as it related to the Clarys‟ LUTPA claim pursuant to La.R.S.
51:1401, et seq.
Louisiana Revised Statutes 51:1405(A) states that “[u]nfair methods of
competition and unfair or deceptive acts or practices in the conduct of any trade or
commerce are hereby declared unlawful.”
The Louisiana Unfair Trade Practices Act, La. R.S. 51:1401, et seq., does not enumerate those instances of conduct that constitute unfair trade practices, but La. R.S. 51:1405(A) provides that “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” This Court has noted that the LUTPA is patterned after the Federal Trade Commission Act and prohibits the same type of deceptive and anticompetitive conduct as prohibited by the Federal Trade Commission Act. Capitol House Preservation Co., LLC v. Perryman Consultants, Inc., 2008-0367 (La.App. 1st Cir.8/28/09), 47 So.3d 408, 417, writ denied, 2009-2638 (La.2/12/10), 27 So.3d 856, cert. denied, --- U.S. ---, 131 S.Ct. 104, 178 L.Ed.2d 30 (2010). Therefore, in interpreting Louisiana‟s statute, a court must consider how the Federal Trade Commission and the federal courts have applied the Federal Trade Commission Act to various types of conduct. Id. Under the Federal Trade Commission Act, vertical territorial and customer restrictions are not prohibited absent a showing of injury to competition. Red Diamond Supply, Inc. [v. Liquid Carbonic Corp.], 637 F.2d [1001,] 1008 [(5th Cir.), cert. denied, 454 U.S. 827, 102 S.Ct. 119 (1981)]. In addition, the U.S. Fifth Circuit has noted that “the real thrust of the LUTPA, modeled after the Federal Trade Commission Act, ... is to deter injury to competition.” Reingold v. Swiftships, Inc. 126 F.3d 645, 652 (5th Cir.1997) (quoting Omnitech 18 International, Inc. v. Clorox Company, 11 F.3d 1316, 1331 (5th Cir.), cert. denied, 513 U.S. 815, 115 S.Ct. 71, 130 L.Ed.2d 26 (1994)).
Van Hoose, 70 So.3d at 1023-24 (first alteration in original).
As previously discussed regarding the antitrust claim, the Clarys have
adequately alleged injury to competition in this matter. That being the case, we
find that they have stated a cause of action under LUTPA as well. We find no
merit in this assignment of error.
DISPOSITION
For the foregoing reasons, we affirm the trial court‟s denial of the defendants‟
peremptory exceptions of no cause of action directed at the claims of Michael Cal
Clary and Catherine Ann Hixson Clary arising under the Louisiana Antitrust
Statute, La.R.S. 51:122, and the Louisiana Unfair Trade Practices Act, La.R.S.
51:1401, et seq. We assess all costs of this appeal to the defendants, State Farm
Mutual Automobile Insurance Company, State Farm Fire and Casualty Company,
State Farm General Insurance Company, State Farm Life Insurance Company,
State Farm VP Management Corporation, State Farm Bank, F.S.B, Insurance
Placement Services, Inc., Patrick White, Kimberly Rollins White, Gene Haymon,
and David Haymon.
19 NUMBER 16-168
COURT OF APPEAL, THIRD CIRCUIT
STATE OF LOUISIANA
MICHAEL CAL CLARY, ET UX
STATE FARM MUTUAL AUTOMOBILE INS. CO. ETC., ET AL.
CONERY, J., dissents and assigns reasons.
I would reverse the trial court’s ruling denying the Defendants’ peremptory
exception of no cause of action pursuant to the Louisiana Antitrust Statute, La.R.S.
51:122. Further, I would find that trial court’s judgment denying the Defendants’
peremptory exception of no cause of action seeking to dismiss the Clarys’ claim
pursuant to La.R.S. 51:1406, the LUTPA claim, is not a final judgment, but instead
an interlocutory judgment which is not subject to appeal. La.Code Civ.P art. 2083.
FACTS AND PROCEDURAL HISTORY
As the majority comprehensively summarized, this case involves a dispute
over the transition of the business of Gene Haymon’s State Farm Insurance
Agency in Leesville, Louisiana which was occasioned by his decision to retire.
Michael Clary was recruited by State Farm to take over the Haymon Agency. Mr.
Clary knew that David Haymon, Gene’s son and a State Farm Agency Field
Executive (AFE) in Missouri, was also planning to return to Louisiana to become
an agent.
Mr. Clary claimed that he received assurances from Todd McFarland, the
State Farm Bayou Agency Field Office AFE, that steps would be taken by State Farm to assure that Mr. Clary would be treated fairly in the transition of the
insurance policies of the customers of the Haymon Agency. In reliance on the
assurances of Mr. McFarland and further assurances by Ms. Kimberly Rollins,
State Farm’s Vice President of Agency, Mr. Clary remained in Louisiana and
accepted the position in Leesville. The agreement signed by Mr. Clary involved a
division of Mr. Haymon’s book of business between Mr. Clary and Gene Haymon.
From the outset, problems with the arrangement begin to surface, which
eventually led to the Clarys filing suit against the Defendants alleging multiple
claims, including conspiracy to violate and breach the State Farm contracts,
defamation causing intentional infliction of emotional distress, violation of the
insurance whistleblower statute, breach of contractual stipulation pour autri,
detrimental reliance, loss of consortium, as well as a violation of La.R.S. 51:122,
the Louisiana Antitrust Statute, and La.R.S. 51:1406, LUTPA.
The Defendants responded by filing peremptory exceptions of no cause of
action seeking to dismiss the Clarys’ claims pursuant to La.R.S. 51:122, the
Louisiana Antitrust Statute, and LUTPA, La.R.S. 51:1406. The trial court heard
the Defendants’ exceptions on December 16, 2015, took the matter under
advisement, and issued its judgment on January 12, 2016, denying the Defendants’
peremptory exceptions of no cause of action pursuant to La.R.S. 51:122, the
Louisiana Antitrust Statute, and La.R.S. 51:1406, LUTPA. Defendants timely
filed an expedited appeal on both issues.
2 JURISDICTION ON APPEAL
Appeal of the Denial of the Peremptory Exception of No Cause of Action Pursuant To Louisiana’s Antitrust Statute, La.R.S. 51:122
This court cannot determine the merits of an appeal unless there is
jurisdiction which is properly invoked by a valid final judgment. La.Code Civ.P.
art. 2083. The denial of the Defendants’ peremptory exception of no cause of
action seeking to dismiss the Clarys’ claims pursuant to Louisiana’s Antitrust
Statute, La.R.S. 51:122, is not normally appealable.1
However, special jurisdiction allowing the appeal of the denial of a
peremptory exception of no cause of action seeking to dismiss an antitrust claim is
based on La.R.S. 51:134-135. See Van Hoose v. Gravois, 11-976 (La.App. 1 Cir
7/7/11), 70 So. 3d 1017, 1021.2 The Defendants have timely complied with the
expedited appeal delays of the trial court’s judgment of January 16, 2016.
Therefore, I agree with the majority that this court has the necessary jurisdiction on
1 Louisiana Code of Civil Procedure Article 1915 provides this court with the jurisdictional basis for appeal in general. It was revised by the legislature effective August 1, 2013, and that version of the article is applicable to this court’s determination of jurisdiction. 2 Louisiana Revised Statutes 51:134 provides:
In all cases under this Part the defendant shall file all exceptions in limine litis, or if necessary in the alternative, after the usual delays, and any additional delays as the court may allow; however, a plea to the jurisdiction is not waived by other pleas or exceptions filed. The judge shall take up such exceptions in preference over all other business and shall decide all questions raised in the exceptions within ten days after submission, and his ruling shall have the effect of res judicata, unless the party cast shall appeal within five days. The appeal is returnable within ten days to the appellate court which shall hear and determine the case within forty days. If the exceptions are overruled by final judgment of the appellate court, the defendant shall file his answer covering all questions of controverted fact within fifteen days, and the case may be set for trial on the application of either party, which case the judge shall consider in preference over all other business.
3 appeal to review de novo the denial of the Clarys’ claims against the Defendants
for violation of Louisiana’s Antitrust Statute, La.R.S. 51:122.
Appeal of the Denial of the Peremptory Exception of No Cause of Action Pursuant to Louisiana’s Unfair Trade Practices Act, La. R.S. 51:1405
The Defendants have also appealed the denial of their peremptory exception
of no cause of action seeking to dismiss the Clarys’ claims pursuant to La.R.S.
51:1406, LUTPA. Louisiana Revised Statutes 51:1405(B) provides, in pertinent
part, the rule governing an appeal from the district court in a LUTPA claim,
“Appeals may be had from any ruling of a district court in accordance with the
Code of Civil Procedure, except that such appeals shall be given preference and
heard in priority to other appeals.”
Once again, this court cannot determine the merits of an appeal unless there
is jurisdiction which is properly invoked by a valid final judgment, pursuant to
Louisiana Code of Civil Procedure Article 2083. The procedure for determining
whether an exception sustained in part when it only partially dismisses the claims
against a party is appealable is found in La.Code Civ.P. art. 1915(B)(1),3 which
provides:
When a court renders a partial judgment or partial summary judgment or sustains an exception in part, as to one or more but less than all of the claims, demands, issues, or theories against a party, whether in an original demand, reconventional demand, cross-claim, third-party claim, or intervention, the judgment shall not constitute a final judgment unless it is designated as a final judgment by the court after an express determination that there is no just reason for delay. Louisiana Code of Civil Procedure Article 1915 (B)(2) further provides: In the absence of such a determination and designation, any such order or decision shall not constitute a final judgment for the purpose of an immediate appeal and may be revised at any time prior
3 Louisiana Code of Civil Procedure Article 1915 was revised by the legislature effective August 1, 2013, and that version of the article is applicable to this court’s determination of jurisdiction.
4 to rendition of the judgment adjudicating all the claims and the rights and liabilities of all the parties.
The January 12, 2016 judgment of the trial court did not designate the denial
of the Defendants’ peremptory exception of no cause of action seeking to dismiss
the Clarys’ claims pursuant to the LUTPA as a “final judgment.” Therefore, I
would find it is not a final judgment, but an interlocutory ruling pursuant to
La.Code Civ.P. art. 2083(C), which provides, “An interlocutory judgment is
appealable only when expressly provided by law.” The official revision comments
to La.Code Civ.P art. 2083 provide that, “Judgments overruling the following
exceptions have been held to be interlocutory and unappealable: exceptions of no
right or cause of action.”
Defendants cite Van Hoose, which cited two cases addressing LUTPA
claims along with antitrust claims on appeal. In reviewing the two cases cited in
support of the conclusion in Van Hoose, I would find that neither support this
court’s jurisdiction to review on appeal the Clarys’ LUTPA claim.
In Southern Tool & Supply, Inc. v. Beerman Precision, Inc., 03-960 (La.
App 4 Cir. 11/26/03), 862 So.2d 271, writs denied, 03-3481 (La. 3/1/04), 869
So.2d 821, 03-3518 (La. 3/12/04), 869 So.2d 825, 03-3536 (La. 3/1/04), 869 So.2d
826, the court of appeal did not address the issue of jurisdiction on appeal over the
plaintiff’s LUTPA claim. The court only considered the trial court’s reasons for
ruling, which collectively referred to paragraphs eighteen to twenty four of the
plaintiff’s petition. The appeal court addressed each of plaintiff’s three causes of
action separately, i.e. claims made under La.R.S. 51:122-123 of the Louisiana
antitrust laws, and La.R.S. 51:1406, the LUTPA claim. However, in its discussion
5 of the peremptory exception of no cause of action for the plaintiffs’ LUTPA claim,
there was no discussion of the court’s basis for jurisdiction.
In Jefferson v. Chevron U.S.A. Inc., 97-2436 (La.App 4 Cir. 5/20/98) 98-254
(La.App. 4 Cir 5/20 98), 713 So.2d 785, writ denied, 98-1681 (La. 10/16/98), 727
So.2d 441, the court of appeal found that La.R.S. 51:135 provided for an expedited
appeal from the trial court’s denial of the defendant’s motion for summary
judgment. The court of appeal also found “the appellate jurisdiction conferred by
[La.R.S.] 51:135 applied specifically to antitrust claims, and absent irreparable
injury, defendant had no right to appeal the denial of the summary judgment as to
plaintiffs’ non-antitrust claims. La.Code Civ.P art. 2083.” Jefferson, 713 So.2d at
787. However, the Defendant’s sought supervisory writs for the non-antitrust
claims and the appeal court consolidated the writ applications on appeal.
Therefore, the antitrust claims and the non-antitrust claims were considered in the
same appeal, “albeit through separate procedural vehicles.” Jefferson, 713 So.2d at
787.
In Van Hoose, the first circuit determined that based on the forgoing
jurisprudence, “in the event that the Court does not have appellate jurisdiction over
the LUTPA claim, we choose to exercise our supervisory jurisdiction pursuant to
Louisiana Constitution of 1974 Article V, § 10(A).4 However, in Fontenot v. Miss
4 Louisiana Constitution of 1974 Article V, § 10(A) provided (emphasis added):
Jurisdiction. Except as otherwise provided by this constitution, a court of appeal has appellate jurisdiction of (1) all civil matters, including direct review of administrative agency determinations in worker’s compensation matters as heretofore or hereafter provided by law, (2) all matters appealed from family and juvenile courts, and (3) all criminal cases triable by a jury, except as provided in Section 5, Paragraph (D)(2) of this Article. It has supervisory jurisdiction over cases which arise within its circuit.
6 Cathie’s Plantation, Inc., 634 So.2d 1380, 1381 (La.App. 3 Cir. 1994), this court
stated:
A denial of an exception of no cause of action is interlocutory and not appealable where there is no showing of irreparable harm. La.C.C.P. arts. 1841, 2083; Wallace v. Pan American Fire & Casualty Ins. Co., 386 So.2d 158 (La.App. 3d Cir.1980). Merely requiring the parties to go to trial does not constitute irreparable injury. The test for determining whether an interlocutory judgment may cause irreparable harm is whether the procedural error will have such an effect on the merits of the case that the appellate court cannot correct an erroneous decision on the merits. Bernard v. Allstate Ins. Co., 396 So.2d 548 (La.App. 3d Cir.1981). We think in this case it would not.
The Clarys have, as stated above, lodged a total of eight separate causes of
action against the Defendants, including their claim made under LUTPA. I would
therefore find, as did the court in Fontenot, that the denial of the trial court of the
Defendants’ peremptory exception of no cause of action seeking to dismiss the
Clarys’ LUTPA claim will not “cause irreparable harm.” Therefore, pursuant to
La.Code Civ.P. art. 2083, I would dismiss the appeal of the trial court’s
interlocutory judgment denying the Defendants’ peremptory exception of no cause
of action seeking the dismissal of the Clarys’ claim under the LUTPA.
ASSIGNMENTS OF ERROR
The two assignments of error on appeal related to the Clarys’ claim pursuant
to the Louisiana Antitrust Statute, La.R.S. 51:122, are as follows:
I. The trial court erred when it decided that it could not grant an exception of no cause of action that dismissed some, but not all, of these plaintiffs’ claims.
II. The trial court erred when it overruled/denied Appellants Exception of No Cause of Action as to Appellees’ restraint of trade claim under La.Rev. Stat. § 51:122.
7 Assignment of Error One - Reliance by the Trial Court on the Louisiana Supreme Case of Everything on Wheels v. Subaru S. Inc., 616 So.2d 1234 (La.1993).
In their first assignment of error, the Defendants claim that the trial court
committed an error of law in finding and stating in its judgment:
While the Court does believe the Plaintiffs have stated a cause of action for both alleged violations, the Court also notes Everything on Wheels Subaru, Inc. v. Subaru S., Inc., “if there are two or more items of damages or theories of recovery which arise out of the operative facts of a single transaction or occurrence, a partial judgment on an exception of no cause of action should not be rendered to dismiss one item of damages or theory of recovery.” [Everything on Wheels v. Subaru S. Inc.,] 616 So.2d 1234(La.1993).
After the Everything on Wheels ruling by the supreme court was rendered,
the legislature amended La.Code Civ.P. art. 934 in 2003 to state as follows:
When the grounds of the objection pleaded by the peremptory exception may be removed by amendment of the petition, the judgment sustaining the exception shall order such amendment within the delay allowed by the court. If the grounds of the objection raised through the exception cannot be so removed, or if the plaintiff fails to comply with the order to amend, the action, claim, demand, issue, or theory shall be dismissed.
The comment to the 2003 amendment of La.Code Civ.P. art. 934 specifically
states:
The purpose of the 2003 amendment to this Article is to clarify that pursuant to Article 1915(B) the trial court can now render a partial judgment sustaining an exception in part as to one or more but less than all of the actions, claims, demands, issues, or theories in the case. When an exception is sustained to less than all the claims, demands, issues or theories in an action, the judgment shall not constitute a final judgment unless it is designated as such after an express determination that there is no just reason for delay.
More recently, a panel of this court discussed the application of the
peremptory exception of no cause of action in affirming the dismissal of the
plaintiff’s bystander damages claim and stated:
A partial judgment on an exception of no cause of action should not
8 be rendered to dismiss only one theory of recovery out of several within a single cause of action. Everything on Wheels Subaru, Inc. v. Subaru S., Inc., 616 So.2d 1234 (La.1993). However, a partial judgment on an exception of no cause of action may be rendered to dismiss one of several separate causes of action. Id. In determining whether a claim can be properly dismissed through an exception of no cause of action, then, it is necessary to determine whether that claim is an alternate theory of recovery or an independent cause of action.
Castille v. La. Medical Mut. Ins. Co., 14-519, pp. 3-4 (La.App. 3 Cir. 11/5/14), 150
So.3d 614, 618.
In their petition, the Clarys stated a total of eight separate causes of action
including the one remaining at issue on appeal, “C. Third Cause of Action –
Conspiracy in Restraint of Trade in Violation of the Louisiana Anti-Trust
Statute[,]” claiming that the Defendants have violated La.R.S. 51:122.
The Clarys’ other causes of action include the following:
A. First Cause of Action-Detrimental Reliance
B. Second Cause of Action – Breach of Contract
D. Fourth Cause of Action – Violation of the Louisiana Unfair Trade Practices Act,
E. Fifth cause of Action/Intentional Inflection of Emotional Distress and Conspiracy to Intetionally Inflict Emotional Distress
F. Sixth Cause of Action/Whistleblower
G. Seventh Cause of Action - Breach of Contract Stipulation Pour Autri
H. Eighth Cause of Action- Loss of Consortium
Louisiana Revised Statutes 51:122, Louisiana’s Antitrust Statute, clearly
allows for an independent cause of action, separate and apart from the other claims
made by the Clarys in their petition. Louisiana Revised Statutes 51:134 mandates
that adverse rulings made by a trial court under this statute are subject to
9 immediate appeal, with shortened deadlines for appeal. The basis of this court’s
appellate jurisdiction in this case provides that failure to comply with the required
appeal deadlines “shall have the effect of res judicata, unless the party cast shall
appeal within five days.” La.R.S. 51:134.
Obviously, the statute contemplates that a claim made under La.R.S. 51:122
is capable of being dismissed by way of a peremptory exception of no cause of
action, without dismissing the plaintiff’s remaining claims. Therefore, the trial
court committed an error of law in denying the Defendants peremptory exception
of no cause of action pursuant to La.R.S. 51:122, on that basis. I join the
majority’s decision on this narrow issue that the trial court committed legal error in
denying the exception on this basis alone. I further agree with the majority’s view
that the appeal of the denial of the exception based on the provisions of La.R.S.
51:134 as discussed infra is proper and we do have jurisdiction over that issue on
appeal.
Assignment of Error Two – The Clarys’ Failed To State A Cause Of Action Pursuant to La.R.S. 51:122, The Louisiana Antitrust Statute
The Clarys’ claim under Louisiana’s Antitrust Statute, La.R.S. 51:122, is
found in paragraphs forty-eight through fifty of their petition which states:
C. Third Cause of Action - Conspiracy in Restraint of Trade in Violation of the Louisiana Antitrust Statute
The conspiracy effected between DAVID HAYMON, GENE HAYMON, KIMBERLY ROLLINS, PATRICK WHITE and other STATE FARM officials caused the restraint of trade of MIKE CLARY and injured his ability to perform the STATE FARM marketing services in the Leesville community. Defendants’ conduct clearly had an adverse effect on MIKE CLARY’S ability to compete in the Leesville market. As effected, the conspiracy by these Defendants to deny MIKE CLARY the opportunity to service accounts and acquire new accounts that he was told he would have
10 when he opened his agency, and had denied MIKE CLARY of the opportunity to accrue benefits from the beginning of January 2012 through the present and had resulted in the loss of many policies.
The conspiracy among the Defendants harmed consumers by ensuring they received false information which consumers relied upon to select their insurance agents, by depriving customers of the benefits of their choice of insurance agents; and by exposing private information of consumers to those not licensed as insurance agents in Louisiana.
50.
The actions of Defendants constitute violations of the Louisiana Anti-Trust Statute which provides: “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce in this state is illegal.” Accordingly, MIKE CLARY is entitled to treble damages, costs, and reasonable attorney fees as a result of the breach of La. R.S. 51:122.
Louisiana Revised Statutes 51:122
Louisiana Revised Statutes 51:122, Louisiana’s Antitrust Statute states:
A. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce in this state is illegal.
B. Whoever violates this Section shall be fined not more than five thousand dollars, or imprisoned, with or without hard labor, not more than three years, or both.
C. For purposes of this Title, a parent corporation, limited liability company, partnership, or partnership-in-commendam is not capable of conspiring with any subsidiary that it controls, and each such controlled subsidiary is not capable of conspiring with any other wholly owned subsidiary controlled by the same common parent.
D. For the purposes of this Part only, an officer or employee of a legal entity is not capable of conspiring with the legal entity or with another officer or employee of the legal entity when they are acting on behalf of the entity.
In Van Hoose, which also involved a dispute between insurance agents and
their insurance agencies, a panel of our sister circuit stated:
11 The federal and state antitrust laws were intended to be sweeping in breadth, encompassing every conspiracy, contract, or combination that restrains trade. Louisiana Power & Light Co. v. United Gas Pipe Line Co., 493 So.2d 1149, 1154-55 & n. 12 (La.1986). Not every business arrangement that restrains trade in some manner is illegal, however. The first step in analyzing an agreement to restrain trade is to determine whether it should be categorized as horizontal or vertical.
Van Hoose, 70 So.3d at 1022.
All parties agree that this case involves a vertical restraint of trade which
was defined in Plaquemine Marine, Inc. v. Mercury Marine, 03-1036 (La.App 1
Cir. 7/25/03), 859 So.2d 110 as follows, “A vertical restraint is imposed by persons
at different levels of distribution, usually by one higher up in the distribution chain
than the party restrained. When a vertical conspiracy is alleged, plaintiffs must
show that the restraint of trade violates the ‘rule of reason.’” Plaquemine Marine,
Inc., 859 So.2d at 118. “The rule of reason analysis under both federal and
Louisiana law requires proof of three elements: that the defendants (1) engaged in
a conspiracy (2) that restrained trade or injured competition (3) in a particular
market.” Van Hoose, 70 So.3d at 1022.
The rule of reason and its application to the analysis of an antitrust claim
under La.R.S. 51:122 requires that a plaintiff must “include an allegation of
damage to competition” in the petition “which cannot be met by broad allegations
of harm to the ‘market’ as an abstract entity.” Plaquemine Marine, 859 So.2d at
118.
Under our system of fact-pleading, a plaintiff is required to state “material
facts that form the basis for the asserted cause of action.” Van Hoose, 70 So. 2d at
1023. This requirement is equally if not more important in stating a claim for an
antitrust violation, as “A mere conclusion unsupported by material facts does not
set forth a cause of action; therefore, conclusory statements of fact or formulaic
12 recitations of the elements of an antitrust violations are insufficient to state a
claim.” Id. at 1023.
Allegations in the Clarys’ Petition
In this case, the Clarys allege in their petition at paragraph forty-eight that
the Defendants “caused the restraint of trade of MIKE CLARY and injured his
ability to perform the STATE FARM marketing services in the Leesville
community.” This conduct by the Defendants “clearly had an adverse effect on
MIKE CLARY’S ability to compete in the Leesville market,” and denied “MIKE
CLARY the opportunity to service and acquire new accounts with STATE Farm
products . . . and to lose more than half of the estimated accounts he was told he
would have when he opened his agency.”
Paragraph forty-nine of the Clarys’ petition states that consumers were
harmed by the Defendants’ conspiracy by receiving “false information which
consumers relied on to select their insurance agents,” deprived them of “the choice
of insurance agents.” Finally, “by exposing private information of consumers to
those not licensed as insurance agents in Louisiana.”
Failure to Allege an Allegation of Damage to Competition
In order for Mr. Clary to state a claim under La.R.S. 51:122, his petition
“must include an allegation of damage to competition.” Plaquemine Marine, 859
So.2d at 118. The allegations made in his petition only state that Mr. Clary was
restrained from performing State Farm marketing services in the Leesville
community, which had an “adverse effect” on both his opportunity to compete and
service new accounts in the Leesville market, which resulted in Mr. Clary suffering
a financial loss. Therefore, the only injuries plead by the Clarys is to themselves
and not injury to competition as required to support an antitrust claim.
13 Even though the Clarys’ claim that insurance consumers were harmed by the
false statements made by the Defendants, which deprived them of their “choice of
insurance agents,” there are no facts to support this conclusion or to indicate that
any of the consumers were deprived of their ability to choose or change insurance
agencies, which would support an “allegation of damage to competition.”
Plaquemine Marine, 859 So.2d at 118.
Therefore, I would find based on a de novo review of the record that the
Clarys have failed to state a claim pursuant to La.R.S. 51:122, the Louisiana
Antitrust Statute, by only pleading injury to Mr. Clary and his business relationship
with State Farm, and failing to allege “facts to indicate that anyone other than
themselves was [actually] injured” by the dealings between the Clarys and the
Defendants. Plaquemine Marine Inc., 859 So.2d at 119. Accordingly, I would
reverse the judgment of the trial court denying the Defendants’ peremptory
exception of no cause of action claim pursuant to La.R.S. 51:122, the Louisiana
Antitrust Statute.
CONCLUSION
Pursuant to the requirements of La.Code Civ.P. art. 934, were this a majority
opinion, this case would have to be remanded in order for the Clarys to be afforded
an opportunity to amend their petition in accordance with the delays set by the trial
court. See Byargeon v. Concordia Chamber of Commerce, Inc., 15-900 (La.App. 3
Cir. 3/16/16), writ denied, 16-705, (La. 6/3/16), 192 So.2d 752. Since the majority
has affirmed the trial court’s denial of the exception of no cause of action as to
both the antitrust claims and the LUTPA claims, a remand at this juncture is moot,
but I would find that the entire issue could be revisited on final appeal after full
trial on the merits.
Related
Cite This Page — Counsel Stack
Michael Carl Clary, Et Ux. v. State Farm Mutual Automobile Ins. Co. Etc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/michael-carl-clary-et-ux-v-state-farm-mutual-automobile-ins-co-etc-lactapp-2016.