Power Marketing Direct, Inc. v. Foster

906 So. 2d 1276, 2005 La. App. LEXIS 1752, 2005 WL 1523067
CourtLouisiana Court of Appeal
DecidedJune 29, 2005
Docket39,777-CA
StatusPublished
Cited by2 cases

This text of 906 So. 2d 1276 (Power Marketing Direct, Inc. v. Foster) 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.

Bluebook
Power Marketing Direct, Inc. v. Foster, 906 So. 2d 1276, 2005 La. App. LEXIS 1752, 2005 WL 1523067 (La. Ct. App. 2005).

Opinion

906 So.2d 1276 (2005)

POWER MARKETING DIRECT, INC., Plaintiff-Appellee
v.
Chris FOSTER, Defendant-Appellant.

No. 39,777-CA.

Court of Appeal of Louisiana, Second Circuit.

June 29, 2005.

*1277 Sharp, Hymel, Cerniglia, Colvin, Weaver & Davis, L.L.C., by James H. Colvin, Jr., Baton Rouge, for Appellant.

Hudson, Potts & Bernstein, L.L.P., by Jan P. Christiansen, Monroe, for Appellee.

Before DREW, MOORE and LOLLEY, JJ.

MOORE, J.

Chris Foster appeals a summary judgment that annulled his default judgment against Power Marketing Direct Inc. For the reasons expressed, we reverse.

Procedural Background

In October 2001, Foster signed a license agreement with Power Marketing, a furniture retailer domiciled in Ohio. This granted Foster the exclusive right to sell Power Marketing's furniture and bedding in "Ouachita County in Monroe, LA." It also gave Foster access to certain "intellectual property" and required him to maintain *1278 adequate inventories of Power Marketing products. Most significantly, the agreement contained a covenant not to compete and a "choice of law and forum" clause selecting Ohio law and designating Franklin County, Ohio, as the jurisdiction for any lawsuit arising from the agreement.

According to Power Marketing, in early 2002 Foster began another business that directly competed with Power Marketing in the Monroe area. It filed a complaint against him on May 22, 2002, in the Common Pleas Court of Franklin County, Ohio, urging breach of contract and violation of Ohio's Uniform Trade Secrets Act. Foster answered this complaint with the affirmative defenses of fraudulent inducement and material breaches of Power Marketing's obligations under the agreement.

While the Ohio case was pending, Foster filed the underlying suit on May 12, 2003, in the Fourth Judicial District Court, Ouachita Parish. This demanded damages for breach of contract; it also sought declarations that the non-competition and choice-of-law clauses violated Louisiana public policy and the Louisiana Unfair Trade Practices Act, respectively.

According to Foster's statement of uncontested facts, he served Power Marketing under the Long-Arm statute by sending a copy of his petition by certified mail to the company's registered agent in Ohio, Jeffrey Hosking.[1] Hosking refused to accept it; he returned the letter "refused." Power Marketing filed no responsive pleading and made no appearance in the Fourth JDC proceeding.

Foster took a preliminary default on July 10 and, without advising Power Marketing's counsel in Ohio, confirmed it on July 31, 2003. By the default judgment, the district court declared the non-competition clause null and void as against public policy and the Louisiana Unfair Trade Practices Act. The judgment also awarded Foster damages of $25,000.

Apparently after receiving notice of the Louisiana judgment, Power Marketing appealed. By unpublished opinion, this court affirmed in part and reversed in part. Foster v. Power Marketing Direct Inc., 38,452 (La.App. 2 Cir. 5/12/04), 874 So.2d 436 (table). The court held (1) the Fourth JDC had subject matter jurisdiction to hear the case; (2) Foster did not make an adequate prima facie case for $25,000 damages; and (3) the non-competition clause violated Louisiana's restraint of business statute, La. R.S. 23:921 F.

While the appeal was pending, Power Marketing filed the instant suit to annul the default judgment. It conceded that its registered agent had refused service, but alleged that filing suit in Ouachita Parish was a direct violation of the license agreement; and that despite the ongoing contract litigation in Ohio, Foster never gave Power Marketing or its counsel any notice that he intended to take or confirm the default in Louisiana. Power Marketing alleged that this conduct amounted to fraud or ill practices, warranting annulment under La. C.C.P. art. 2004.

Foster filed a motion for summary judgment, arguing that he had complied with every requirement for confirming a default judgment and that lack of notice is not fraud or ill practice. Just because he knew that Power Marketing was represented by Ohio counsel in the Ohio suit, he contended, he was under no obligation to inform counsel of the Louisiana proceedings. In support he cited Mossy Motors Inc. v. Cameras America, XXXX-XXXX (La.App. 4 Cir. 6/25/03), 851 So.2d 336.

*1279 Power Marketing filed its own motion for summary judgment, reiterating, "Although Chris Foster knew that Power Marketing had attorneys representing it in connection with litigation over the same issues in Ohio, he did not notify Power Marketing or its attorneys of the new lawsuit filed in Louisiana." In support, it cited Conerly v. Jefferson, 2001-2220 (La.App. 4 Cir. 5/29/02), 820 So.2d 1173, for the principle that the plaintiff's failure to notify the defendant of his intention to confirm a default was an ill practice.

After a hearing, the district court rendered oral reasons for judgment on October 15, 2004.[2] The court noted that refusal of service constitutes valid service of process, but that default judgment presupposes notice of the proceeding. Citing Russell v. Illinois Central Gulf R. Co., 96-2649 (La.1/10/97), 686 So.2d 817, the court found that "ill practice" under Art. 2004 included confirming a default without notifying defense counsel. The court rendered judgment annulling the default judgment. Foster filed the instant appeal on November 24, 2004.

After the appeal was lodged with this court, the district court filed a written per curiam on January 18, 2005, "to amplify somewhat the court's oral reasons for judgment." This document stated that Foster violated his agreement concerning choice of forum in an "attempt to secure a more favorable forum for litigation of the non-competition provision." Citing the "fortuitous refusal of the certified letter by Power Marketing's agent," the court found Foster was "in a position to go behind everyone's back and proceed to obtain a default judgment in Louisiana unbeknownst to opposing counsel or party in Ohio with whom he was still engaged in ongoing litigation." Finding these to be "bad faith actions," the court concluded that "it was incumbent upon Mr. Foster to notify his opponent that he had initiated the Louisiana litigation in order to obtain a valid default judgment and avoid commission of an `ill practice' as contemplated by our law."

Applicable Law

The motion for summary judgment is a procedural device to avoid a full-scale trial when there is no genuine issue of material fact. Kay v. Carter, 243 La. 1095, 150 So.2d 27 (1963); Brown v. International Paper Co., 38,892 (La.App. 2 Cir. 9/22/04), 882 So.2d 1228, writ denied, 2004-2865 (La.1/28/05), 893 So.2d 78. Summary judgment procedure is designed to secure the just, speedy and inexpensive determination of every action, except certain domestic actions; the procedure is favored and shall be construed to accomplish these ends. La. C.C.P. art. 966 A(2); Racine v. Moon's Towing, 2001-2837 (La.5/14/02), 817 So.2d 21. The motion should be granted if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966 B. Appellate review of the grant or denial of summary judgment is de novo. Jones v. Estate of Santiago, XXXX-XXXX (La.4/14/04), 870 So.2d 1002.

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906 So. 2d 1276, 2005 La. App. LEXIS 1752, 2005 WL 1523067, Counsel Stack Legal Research, https://law.counselstack.com/opinion/power-marketing-direct-inc-v-foster-lactapp-2005.