STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
04-1483 consolidated with 04-1484, 04-1485, & 04-1486
WALTER A. GLOD, JR., M.D.
VERSUS
W. GREGORY BAKER, ET AL.
********** APPEAL FROM THE FIFTEENTH JUDICIAL DISTRICT COURT PARISH OF LAFAYETTE, NO. 975864 HONORABLE DURWOOD WAYNE CONQUE, DISTRICT JUDGE
********** ULYSSES GENE THIBODEAUX CHIEF JUDGE **********
Court composed of Ulysses Gene Thibodeaux, Chief Judge, Jimmie C. Peters, and Marc T. Amy, Judges.
PETERS, J., DISSENTS AND ASSIGNS WRITTEN REASONS.
AMY, J., CONCURS AND ASSIGNS REASONS.
AFFIRMED.
Nancy Scott Degan Roy C. Cheatwood Jennifer B. McNamara Kent Andrew Lambert Baker, Donelson, Bearman, Caldwell & Berkowitz, PC 201 St. Charles Avenue - Suite 3600 New Orleans, LA 70170 Telephone: (504) 565-5266 COUNSEL FOR: Defendants/Appellants - Nawlins Kajun Foods, L.L.C., NKF I-DR Limited Partnership, LAF Foods, Inc., BCM, L.L.C., Greg Baker Enterprises. CPCI Incorporated, Louis B. Viviano, CBC International, Inc., & V L B, Inc.
Steven Gerald Durio Robert L. Broussard Jessica Watts Farmer Durio, McGoffin & Stagg P. O. Box 51308 Lafayette, LA 70505-1305 Telephone: (337) 233-0300 COUNSEL FOR: Defendants/Appellees - Donald J. Baker, Kirby Pecot, Andrew B. Jameson, Max Luttgeharm, & M. L. Godley, M.D. Joseph C. Giglio, Jr. Liskow & Lewis P. O. Box 52008 Lafayette, LA 70505 Telephone: (337) 232-7424 COUNSEL FOR: Plaintiff/Appellant - Walter A. Glod, Jr., M.D.
Robert A. Kutcher Nicole S. Tygier Patricia Diane Tunmer Keegan E. Chopin Chopin, Wagar, Richard, & Kutcher, LLP Two Lakeway Center - Suite 900 3850 North Causeway Boulevard Metairie, LA 70002 Telephone: (504) 830-3838 COUNSEL FOR: Defendants/Appellees - Copeland’s of New Orleans, Inc., the Succession of William A. Copeland, III, and Alvin C. Copeland, Jr.
William H. Parker, III Allen & Gooch P. O. Drawer 3768 Lafayette, LA 70502-3768 Telephone: (337) 291-1270 COUNSEL FOR: Defendants/Appellees - Darnall, Sikes, Kolder, Frederick & Rainey and Ed Larry Sikes
Reginald J. Ringuet Ringuet, Daniels & Collier P. O. Box 52647 Lafayette, LA 70505 Telephone: (337) 232-0002 COUNSEL FOR: Defendants/Appellants - CBC International, Inc., NKF I-DR Limited Partnership, Nawlins Kajun Foods, L.L.C., CPCI Incorporated, Greg Baker Enterprises, V L B, Inc., LAF Foods, Inc., BCM, L.L.C., and Louis B. Viviano
Larry Lane Roy Jennifer A. Wells Preis, Kraft & Roy P. O. Drawer 94-C Lafayette, LA 70509 Telephone: (337) 237-6062 COUNSEL FOR: Defendants/Appellees - Coregis Insurance Company and Chris Verret
George Allen Walsh Alice Estill 601 Napoleon Street Baton Rouge, LA 70802 Telephone: (225) 381-9305 COUNSEL FOR: Defendants/Appellees - W. Gregory Baker and Vikki Lynn Baiers John Bologna Krentel 601 North Carrollton Avenue New Orleans, LA 70119-4747 Telephone: (504) 569-1800 COUNSEL FOR: Defendants/Appellees - Copeland’s of New Orleans, Inc., the Succession of William A. Copeland III, and Alvin C. Copeland, Jr. THIBODEAUX, Chief Judge.
Plaintiffs, BCM, L.L.C. and Nawlins Kajun Foods, L.L.C., appeal the
trial court’s decision to grant summary judgment in favor of Copeland’s of New
Orleans, Inc. The trial court determined that plaintiffs’ claim under the Louisiana
Unfair Trade Practices Act had prescribed and that they did not sufficiently prove the
elements of their intentional interference with contract claim. We affirm the judgment
of the trial court.
I.
ISSUES
We must determine whether BCM and Nawlins’ claims under the
Louisiana Unfair Trade Practices Act are time-barred. We must also consider
whether BCM and Nawlins have satisfied the elements of their claim for intentional
interference with contract.
II.
FACTS
In 1994, William Gregory Baker (Baker) entered into a franchise
agreement with Copeland’s of New Orleans, Inc. (CNO) to open a Copeland’s
restaurant in Lafayette. In November of that same year, Baker transferred all of his
interests in the franchise agreement to BCM, L.L.C. (BCM) with the written consent
of CNO. The members of BCM were William Baker and Vikki Baiers (Baiers).
Baker then persuaded others to invest in BCM. Louis Viviano (Viviano), via his
entity, LAF Foods, Inc. (LAF), purchased a 30% interest in BCM and later transferred
this interest to CBC International, Inc. (CBC), another Viviano entity. Walter Glod
(Glod) purchased a 15% interest in BCM. Baker and Baiers each retained a 27.5%
1 interest in BCM. Baker and Baiers later transferred their individual interests in BCM
into two wholly-owned enterprises, respectively Greg Baker Enterprises, Inc. (GBE)
and VLB, Inc. (VLB). Thus, GBE, VLB, and Viviano via CBC owned portions of
BCM, which owned the interests in the franchise agreement.
The Copeland’s restaurant in Lafayette opened in September of 1995.
During the opening, Al and Bill Copeland met Viviano. An October article in the
New Orleans Times-Picayune reported on the opening and identified Viviano as one
of the owners. In addition, a CNO press release announcing the opening referred to
“Baker and fellow owners.” The restaurant was a success, and Baker wished to open
a Copeland’s franchise in Orlando. In 1996, CNO entered into a second franchise
agreement with Baker and an entity named Nawlins Kajun Foods, L.L.C. (Nawlins)
to open the Orlando venue. Viviano, via CBC, had purchased a 1/3 interest in
Nawlins. Baker and Baiers each controlled the remaining 2/3 of Nawlins. Viviano
loaned $450,000 to Nawlins so that Nawlins could purchase furniture, fixtures, and
equipment for the Orlando site. In addition, Viviano purchased individual notes from
Nawlins totaling over $1 million. The Orlando restaurant opened in September 1996.
At the opening, Al and Bill Copeland again met Viviano. Bill Copeland spoke with
Viviano about his investments in both the Lafayette and Orlando franchises. After
the Orlando opening, Bill Copeland invited Viviano and his family to the CNO suite
at the New Orleans Superdome to attend a football game.
CNO sent default letters on February 14, 1997 and March 3, 1997,
notifying plaintiffs of the breach and asking them to restore ownership and control
of BCM and Nawlins to their original states. After the default letters, CNO’s
attorneys invited Viviano to submit a franchise application. CNO rejected the
application.
2 CNO then instituted arbitration proceedings in May, seeking termination
of the franchise agreements for both the Lafayette and Orlando locations. CNO
asserted that the transfer of Baker’s interests in the franchises had been performed
without prior written consent, as mandated by the franchise agreement. CNO also
requested it be allowed to assume the lease and take title to the furnishings, fixtures,
and equipment. On September 30, 1997, the arbitrator issued an award terminating
both franchise agreements, with termination to be effective thirty days following the
date of the award. On October 6, after the arbitrator rendered his award, CNO
obtained a temporary restraining order allowing it to operate the restaurants pending
an injunction hearing. On October 15, 1997, the court dissolved the temporary
restraining order. On November 18, 1997, CNO filed a petition to modify the
arbitration award to allow CNO to purchase the franchisees’ furnishings, fixtures, and
equipment and to recognize CNO’s contractual right to assume the lease. The district
court, however, confirmed the arbitration award in its entirety on January 27, 1998.
On March 2, 1998 and April 17, 1998, CNO filed involuntary bankruptcy proceedings
against the former franchisees. These proceedings were later closed by the
bankruptcy court.
On January 29, 1998, with an amendment on September 13, 2001, BCM
and Nawlins, owned in various proportions by Baker, Baiers, Viviano and Viviano
entities, sued CNO, as well as Al and Bill Copeland, alleging unfair trade practices
under the Louisiana Unfair Trade Practices Act and intentional interference with
contract. On March 10, 2004, CNO filed a motion for partial summary judgment
seeking dismissal of plaintiffs’ claims. The trial court granted the motion for
summary judgment, finding that plaintiffs’ claim under the Louisiana Unfair Trade
Practices Act had prescribed and that they did not sufficiently prove the elements of
3 their intentional interference with contract claim. BCM and Nawlins appeal the
dismissal of their claims.
III.
LAW AND DISCUSSION
Unfair Trade Practices
Plaintiffs BCM and Nawlins argue that CNO’s conduct in terminating
the franchise agreements amounts to a violation of the Louisiana Unfair Trade
Practices Act. They assert that CNO, knowing that the restaurants needed outside
financial assistance, enticed Viviano to invest in the franchises by leading him,
through their silence, to believe CNO approved of his involvement. Once the
restaurants were successful, CNO attempted to appropriate them by placing plaintiffs
in default and instituting arbitration proceedings to terminate the franchises and
assume control of the property, equipment, and leases.
Louisiana Revised Statutes 51:1409(E) states that unfair trade practice
claims prescribe one year from the time of the event which gives rise to the claim.1
The initial act which indicates the possibility for a claim of unfair trade practices is
the first default letter, February 14, 1997. Therefore, while the suit is timely, all of
the acts before January 29, 1997 are perempted and cannot be used to support a claim
for unfair trade practices. These perempted acts include: the meetings between Al
and Bill Copeland and Viviano at the Lafayette and Orlando openings; their meetings
at the football game; any conversations that might have occurred between them at
these events; the Times-Picayune news article; and the CNO press release.
1 The opinion in Tessier v. Moffatt, 93 F.Supp.2d 729, 737 n.6 (E.D.La. 1998), points out that “Section 15:1409 contains the word ‘prescribed,’ not ‘perempted.’ LUTPA was enacted in 1972, ten years before the article which defined peremption.”
4 Plaintiffs argue, however, that the peremptive period should not begin
to run until the date the arbitrator terminated the contract, at the latest, October 30,
1997.2 For support, they rely on Tubos de Acero de Mexico, S.A. v. American
International Investment Corp., 292 F.3d 471 (5th Cir. 2002). There, the Fifth Circuit
held that the peremptive period for unfair trade practices did not begin to run until the
lease terminated. At the hearing on the summary judgment motion, plaintiffs argued
to the trial court that CNO’s scheme to take over the franchises was an ongoing,
continuing tort that prevented the peremption period from running until the last act
was committed. We must, therefore, consider whether the peremption period
contained in the Louisiana Unfair Trade Practices Act can be suspended or
interrupted by a continuing tort.
The fourth circuit explored the impact of a continuing tort on the LUTPA
peremption period in Canal Marine Supply, Inc. v. Outboard Marine Corp., 522
So.2d 1201 (La.App. 4 Cir. 1988). The court noted that, in general, “if the statute
which creates a right also provides the time period in which that right must be
exercised, the period is viewed as peremptive.” Id. at 1203. The statute includes a
fixed time period in which the right must be exercised. Thus, the period is
peremptive. LUTPA “created a cause of action which did not exist in Louisiana
before 1972.” Id. The court also analyzed the intent of the legislature in drafting the
statute and noted that LUTPA “is intended to protect the public’s interest in fair
trade.” Id. In addition, LUTPA is essentially penal in nature, as demonstrated by its
provisions for attorney fees and treble damages. The court noted that “[b]ecause the
statute is penal in nature, it is subject to reasonably strict construction.” Id. The court
2 The arbitration award terminated the contract effective thirty days from the date of the award, September 30, 1997.
5 concluded that the novel and unique nature of the cause of action and the heightened
damages awarded in a successful action
militate in favor of an absolute, uninterruptible time period. The UTPA’s provision for triple damages is in derogation of the ordinary rules on damages. Likewise, the right of a private individual to bring suit under the UTPA is a special feature . . . . By including a provision setting forth the time in which the private right of action must be asserted, the legislature showed an intent to remove this unique right from the ordinary rules of prescription. The plain language of R.S. 51:1409 E. shows an intent to make that period absolute (that is peremptive). . . . There is no qualifying language attached to this [time limit]. If the legislature had wanted this time period to be interruptable it could either have said so specifically or have let the ordinary rules of prescription apply by not making special provision for it in the act.
Id. at 1203-04.
A strong line of Louisiana jurisprudence follows this interpretation,
despite some disagreement from the Federal Fifth Circuit. Because the third circuit
has adhered to the general rule that peremption cannot be interrupted or suspended,
we decline to follow the line of cases that permit such an exception where there is a
continuing tort.
Louisiana Civil Code Article 3458 defines peremption as a period of
time during which a right can be exercised and provides that “[u]nless timely
exercised, the right is extinguished upon the expiration of the peremptive period.”
The Louisiana Supreme Court explained that peremption “totally destroys the
previously existing right with the result that, upon expiration of the prescribed period,
a cause of action or substantive right no longer exists to be enforced.” Pounds v.
Schori, 377 So.2d 1195, 1198 (La.1979).
The Civil Code itself does not contemplate any exceptions to this rule.
Louisiana Civil Code Article 3461 states that “[p]eremption may not be renounced,
6 interrupted, or suspended.” The third circuit refused to relax the strict construction
of peremption in Dauterive Contractors, Inc. v. Landry & Watkins, 01-1112 (La.App.
3 Cir. 3/13/02), 811 So.2d 1242. Dauterive argued that in case of a continuous tort,
prescription does not begin until the conduct causing the damage stops. The third
circuit agreed that although “continuous tortious conduct . . . may suspend
prescription, we note again that the pertinent time limitation in this case is
peremptive. Peremption may not be suspended.” Id. at 1259 (emphasis added); see
also Bel v. State Farm Mut. Auto Ins. Co., 02-1292, p. 7 (La.App. 1 Cir. 2/14/03), 845
So.2d 377, 382 (citing Saia v. Asher, 01-1038 (La.App. 1 Cir. 7/10/02), 825 So.2d
1257), writ denied, 03-733 (La. 5/30/03), 845 So.2d 1057 (finding that where a “time
limitation . . . is peremptive, and the principle of continuing torts is a suspensive
principle, ineffective against the effects of peremption, we find the continuing tort
doctrine inapplicable”).
Several federal district court opinions have adopted this reasoning, even
before the fourth circuit decided Canal Marine. The opinion in Cason v. Texaco,
Inc., 621 F.Supp. 1518, 1523 (M.D.La. 1985), stated that the penal nature of LUTPA
required a strict interpretation of the statute. Section 1409(E) “clearly and expressly”
provides a one-year time limit in which an action may be brought. Id. The court
found, however, that strict construction prohibited application of the doctrine of
continuing violation to prevent the commencement of the running of “prescription.”
Id.
Other federal courts rely on Canal Marine for the proposition that “the
UTPA establishes a peremptive period which may not be tolled or interrupted.” Neill
v. Rusk, 745 F.Supp. 362, 364 (E.D.La. 1988); Safford v. Painewebber, Inc., 730
F.Supp. 15 (E.D.La. 1990) (finding that the doctrine of contra non valentem does not
7 apply to a peremptive period, so that unfair trade practices occurring more than one
year before suit was filed were time-barred). In Neill v. Rusk, Neill alleged that Rusk
conspired to eliminate him from participation in a joint venture agreement. Neill
stated that the unfair trade practices began during the joint venture in 1985, but he did
not learn of the scheme until 1987, when he received a copy of a licensing agreement.
The court cited Cason in concluding that the peremptive period in La.R.S. 51:1409(E)
“cannot be enlarged by application of the doctrine of continuing violation.” 745
F.Supp. at 365. The court reasoned:
[T]he fact that Neill was allegedly unaware of his cause of action under the UTPA until receipt of the . . . agreement . . . cannot serve to toll the one-year period. While a prescriptive period may be interrupted, peremptive periods . . . are not subject to interruption or suspension, even under the doctrine of [contra non valentem].
Louisiana appellate courts have also observed this line of reasoning.
Spencer-Wallington, Inc. v. Service Merchandise, Inc., 562 So.2d 1060, 1063
(La.App. 1 Cir.), writ denied, 567 So.2d 109 (La.1990), stated: “[T]he one year
period of limitation for commencement of the action is peremptive, thus not subject
to interruption or suspension even under the doctrine of contra non valentem.” The
decision cited Canal Marine. See also Reed v. St. Charles Gen. Hosp., 01-1148
(La.App. 4 Cir. 3/27/02), 815 So.2d 319; Morris v. Sears, Roebuck & Co., 99-2772
(La.App. 4 Cir. 5/31/00), 765 So.2d 419; Thibaut v. Thibaut, 607 So.2d 587 (La.App.
1 Cir. 1992), writs denied, 612 So.2d 37, 38, and 101 (La.1993); Dufour v. U.S. Home
Corp., 581 So.2d 765 (La.App. 4 Cir. 1991).
Finally, in circumstances similar to Neill v. Rusk, the third circuit
reviewed a case in which a plaintiff, Mayo, sued defendants under LUTPA for selling
him immovable property which defendants did not own. Mayo v. Simon, 94-590
8 (La.App. 3 Cir. 11/2/94), 646 So.2d 973. The court acknowledged that Mayo did not
discover the defective title until several years after the date of the deed transaction,
which was the event giving rise to the LUTPA claim. Nevertheless, the court decided
that “the jurisprudence is clear that the one year period in which to bring a claim is
peremptive, not prescriptive, and cannot be interrupted by contra non valentem.” Id.
at 976; see also Kuebler v. Martin, 610 So.2d 270 (La.App. 5 Cir. 1992).
The Federal Fifth Circuit adopted a different analysis in its opinion in
Tubos, 292 F.3d 471. In that case, American International argued that its LUTPA
claim was not time-barred because Tubos’ conduct during their contract was a
continuing violation that did not stop until the contract terminated. The Fifth Circuit
agreed that the presence of a continuing violation extended the time in which
American International could bring a claim.
The court cited three Louisiana appellate cases from the first circuit, each
of which found that where there is a continuing violation of LUTPA, “the peremptive
period does not begin to run until the violation ceases.” 292 F.3d at 481. In Fox v.
Dupree, 93-120 (La.App. 1 Cir. 12/29/93), 633 So.2d 612, 614, writ denied, 94-296
(La. 3/25/94), 635 So.2d 233, the court found that, although the one-year period in
LUTPA is peremptive, plaintiff’s failure to comply with bond filing and disclosure
requirements constituted a continuing violation of LUTPA so that “[e]very day he
was not in compliance with the law, plaintiff violated the statute.” The opinion
reasoned that “[t]he peremptive term could not even begin to run until a loan broker
complied with the law because every day he is in violation gives rise to a new right
of action for an unfair trade practice.” Id.
Similarly, the decision in Benton, Benton & Benton v. Louisiana Public
Facilities Authority, 95-1367 (La.App. 1 Cir. 4/4/96), 672 So.2d 720, writ denied, 96-
9 1445 (La. 9/13/96), 679 So.2d 110, held that LUTPA’s peremptive period cannot
begin to run as long as violations of LUTPA continue. That case cited South Central
Bell Telephone Co. v. Texaco, Inc., 418 So.2d 531, 533 (La.1982), in which the
supreme court decided that “[w]hen . . . tortious conduct and resulting damages
continue, prescription does not begin until the conduct causing the damages is
abated.” However, Dauterive, 811 So.2d 1242, clarified this point by distinguishing
prescription, which can be interrupted, and peremption, which cannot. In fact,
Dauterive specifically rejected the use of South Central Bell Telephone to justify
suspending peremption. Similarly, Capitol House Preservation Co. v. Perryman
Consultants, Inc., 98-2216 (La.App. 1 Cir. 11/5/99), 745 So.2d 1194, writ denied, 99-
3446 (La. 2/11/00), 754 So.2d 937, the final case on which Tubos relied, depended
on the identical use of South Central Bell Telephone to build from the suspension of
prescription until a continuing tort has abated into the suspension of peremption in
similar circumstances.
The cases upon which the Federal Fifth Circuit based Tubos come
entirely from the Louisiana First Circuit Court of Appeal. In contrast, the third
circuit’s perspective is consistent with opinions from other state circuits, as well as
federal district courts. Additionally, Benton and Capitol House depend on South
Central Bell Telephone, which the third circuit specifically found inapplicable to
peremption in Dauterive. Thus, the third circuit has made a jurisprudential
commitment to a strict definition of peremption embodied in the Civil Code and
manifested in its consistent decisions barring use of the continuing violation doctrine
to suspend peremption.
The acts which occurred after January 29, 1997 do not qualify as unfair
trade practices as a matter of law. These acts are: the October 1997 temporary
10 restraining order; the November 18, 1997 petition to modify the arbitration award;
and the March and April 1998 involuntary bankruptcy proceedings.
These acts are appropriate resorts to the judicial process and not unfair
trade practices. Section 15 of the franchise agreement describes the parties’
respective rights and obligations upon termination of the agreement. The franchisor
has the right to assume the franchisee’s occupancy rights under the lease for the
restaurant and has the right to purchase furnishings, equipment, and supplies. The
arbitration award terminated the franchise agreements but denied CNO the right to
purchase or use any of the franchisees’ furnishings, fixtures, or equipment. The
temporary restraining order and petition to modify the arbitration award represent
valid uses of all available judicial processes to overcome the effects of the arbitrator’s
decision and implement CNO’s rights under the franchise agreement. CNO had a
right to request a temporary restraining order until the court could review the issue.
The court found that the arbitration award was binding and lifted the temporary
restraining order.
Likewise, CNO’s petition to modify the arbitration award alleges that the
arbitrator was not asked to consider whether CNO could exercise its contractual right
to purchase the franchisees’ furnishings, fixtures, and equipment. Therefore, the
arbitrator’s ruling exceeded the scope of the parties’ submission to arbitration. This
is a valid objection to an arbitral award. The court reviewed CNO’s petition and
chose to confirm the award. Similarly, involuntary bankruptcy proceedings are
usually instituted to protect a party’s position as a creditor. CNO was within its rights
to use legal proceedings to protect itself to the fullest extent possible.
Conduct that violates the Unfair Trade Practices Act must involve fraud,
misrepresentation, deception, or unethical conduct. JCD Mktg. Co. v. Bass Hotels &
11 Resorts, Inc., 01-1096 (La.App. 4 Cir. 3/6/02), 812 So.2d 834. In Cajun Restaurant
& Bar, Inc. v. Maurin-Ogden 1978 Pinhook Plaza, 574 So.2d 536 (La.App. 3 Cir.
1991), Maurin-Ogden sued Cajun for past-due rent and obtained a judgment in its
favor. The sheriff seized Cajun’s property, and Maurin-Ogden purchased it. The
third circuit agreed with the trial court that
the Sheriff’s sale was not part of any unfair trade practice . . . . Plaintiff seeks to ground both causes of action in the fact that defendant bid on CAJUN RESTAURANT’S equipment and bought it. This bidding can[not] be . . . an unfair trade practice because it was entirely permitted by our law. . . . This entirely proper use of legal process is not part of any unfair trade practice . . . .
Id. at 538.
The opinion concluded that “Maurin-Ogden was simply the successful bidder at a
legally and properly conducted judicial sale” and that “the sheriff’s sale was not part
of an unfair trade practice.” Id. at 538-39. This circuit has declined to recognize a
proper exercise of judicial process as a basis for an unfair trade practices claim.
In First National Bank of Commerce v. Brown, 525 So.2d 672 (La.App.
1 Cir. 1988), Brown claimed FNBC violated the Louisiana Unfair Trade Practices Act
by suing him in an improper venue to harass him. The appellate court dismissed
Brown’s claim for damages and attorney fees, stating that La.R.S. 51:1409 “does not
concern itself with filing suit in a court of improper venue.” 525 So.2d at 674. In
contrast, plaintiffs rely on Bank of New Orleans & Trust Co. v. Phillips, 415 So.2d
973, 975 (La.App. 4 Cir. 1982), which found that “the intentional, knowledgeable
filing of suit in the wrong venue is an unfair trade practice within the contemplation
of R.S. 51:1401” to show that intentional use of the judicial process to harass a party
can be an unfair trade practice in violation of the Act. In this case, however, plaintiffs
have offered no evidence that suggests CNO intended its resort to judicial process to
12 harass them. CNO’s actions do not incorporate misrepresentation, deception, or
unethical conduct.
Intentional Interference with Contract
Plaintiffs assert the trial court wrongfully granted summary judgment
dismissing their claim for intentional interference with contract. The Louisiana
Supreme Court recognized the existence of a tort claim for intentional interference
with contract in 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228 (La.1989). That case
set forth the elements a plaintiff must satisfy to establish such a claim:
(1) the existence of a contract or a legally protected interest between the plaintiff and the corporation; (2) the corporate officer’s knowledge of the contract; (3) the officer’s intentional inducement or causation of the corporation to breach the contract or his intentional rendition of its performance impossible or more burdensome; (4) absence of justification on the part of the officer; (5) causation of damages to the plaintiff by the breach of contract or difficulty of its performance brought about by the officer.
Id. at 234.
Although the parties do not dispute the first element, there is
disagreement as to whether or not Bill Copeland acted as an officer or director of
CNO. Plaintiffs note that Spurney and subsequent cases include those persons with
a fiduciary relationship to the corporation among those subject to liability for
intentional interference with contract. For instance, in Communication & Information
Resources, Inc. v. Expressions Acquisition Corp., 95-1070 (La.App. 5 Cir. 5/15/96),
675 So.2d 1164, the appellate court found that, although the defendant was not a
corporate officer, he was a member of the board of directors of the relevant
companies and consequently owed them a fiduciary duty. Therefore, the court held
that the defendant was “within the ambit of Spurney and [could] be held liable for
13 intentional interference with contract.” Id. at 1169; see also Krebs v. Mull, 97-2643
(La.App. 1 Cir. 12/28/98), 727 So.2d 564 (holding that defendant’s agreement to act
as co-counsel with plaintiff created a duty of fair dealing and honesty that prohibited
defendant’s interference with an attorney-client contract), writ denied, 99-262 (La.
3/19/99), 740 So.2d 119. Plaintiffs rely on Al Copeland’s deposition testimony, in
which he identified his brother Bill Copeland as responsible for franchise applications
and stated “he’s pretty much in charge of franchising completely.” Assuming,
however, that plaintiffs are able to prove this element of Spurney, they did not
adequately show they would be able to prove the remaining Spurney factors.
At oral arguments on the summary judgment motion, the trial court asked
exactly what CNO did to induce plaintiffs to violate the franchise agreement or to
make the performance of the contract more difficult, which is the third Spurney
factor. Plaintiffs first assert that CNO did not inform the parties to the franchise
agreements that plaintiffs’ failure to obtain consent to the transfers of ownership
constituted a breach of contract. According to plaintiffs, CNO knew that Viviano had
invested in the franchises, knew that this investment violated the franchise agreement
because it had not been approved by CNO, but failed to apprise Viviano of the
violation. CNO’s lack of objection led plaintiffs to believe CNO approved of
Viviano’s part ownership of the franchise agreement.
CNO, however, did not cause the plaintiffs to make the transfers without
obtaining its permission. The arbitrator determined that the franchisees, and not the
franchisors, breached the agreement. Plaintiffs argue that the arbitrator determined
only that the agreement had been breached and that, as a result, CNO was entitled to
terminate; there was no finding that CNO’s conduct relating to the agreement was
proper. However, the issue before the arbitrator was whether or not CNO had the
14 right to terminate the franchise agreement because plaintiffs failed to obtain
permission to transfer ownership interests in the agreement; the arbitrator was not
asked to consider whether or not the parties otherwise acted appropriately in their
contractual relationship.
In WKG-TV Video Electronic College, Inc. v. Reynolds, 92-487 (La.App.
1 Cir. 4/23/93), 618 So.2d 1023, the appellate court affirmed a finding of intentional
interference with contract. In that case, the defendant “manufactured” reasons to
prevent a sale from occurring. The defendant actively concealed information from
the prospective buyer about his negotiations with another party. Id. In this case,
however, plaintiffs did not show CNO prevented them from obtaining copies of the
franchise agreement, or otherwise hampered their access to the contents of the
agreement. Additionally, Baker obtained approval from CNO for the initial transfer
of his interest in the franchise agreement from an individual holding to BCM, so at
least Baker was aware approval was necessary.
Second, plaintiffs argue that CNO’s refusal to approve the acquisition
retroactively rendered contractual performance impossible. CNO, however, had no
obligation to approve retroactively plaintiffs’ acquisition of the interest. Under § 13.3
of the Franchise Agreements, CNO had a duty not to unreasonably withhold its
consent to a transfer. However, the franchise agreement only contemplated CNO in
the position of having to approve a transfer before it was completed. This enables the
franchisor to review the transfer and determine whether the transferee was suitable
to participate in the franchise. Thus, the duty not to unreasonably withhold consent
would attach only before a transfer.
CNO is not required to negate all of the elements of plaintiffs’ claim of
intentional interference with contract. It is required to show only “an absence of
15 factual support for one or more elements essential to the [plaintiffs’] claim, action, or
defense.” La.Code Civ.P. art. 966(C)(2). CNO has. In our view, BCM, L.L.C. and
Nawlins Kajun Foods, L.L.C., have failed to come forward with factual evidence to
show they would be able to satisfy the third, fourth, and fifth elements of Spurney.
Thus, summary judgment was properly granted to CNO on the intentional
interference with contract claim.
IV.
CONCLUSION
For the above reasons, the judgment of the trial court is affirmed. Costs
of appeal are assessed to appellants, BCM, L.L.C. and Nawlins Kajun Foods, L.L.C.
16 NUMBER 04-1483 CONSOLIDATED WITH 04-1484, 04-1485, & 04-1486
COURT OF APPEAL, THIRD CIRCUIT STATE OF LOUISIANA
PETERS, J., dissenting.
I respectfully disagree with the majority’s opinion in this matter. I would
reverse the trial court’s grant of the summary judgment and remand the matter for
further proceedings.
The trial court dismissed the causes of action raised by BCM, L.L.C. and
Nawlins Kajun Foods, L.L.C. (plaintiffs) based on the Louisiana Unfair Trade
Practices Act (LUTPA) and intentional interference with contractual relations and did
so in the context of a summary judgment. In affirming the trial court’s judgment, the
majority concludes that all pre-January 29, 1997 LUTPA acts relied upon by the
plaintiffs are perempted; that all post-January 29, 1997 LUTPA acts are, as a matter
of law, not actionable; and that the plaintiffs cannot satisfy the elements of proof
required for an intentional interference with contract claim.
Addressing the LUTPA ruling first, I agree with the majority’s conclusion that
all acts that occurred before January 29, 1997, which could otherwise be used to
support a claim under LUTPA, are perempted. However, I find that none of the pre-
January 29, 1997 acts in and of themselves that were asserted by the plaintiffs would
support a claim under LUTPA. In fact, these acts actually benefited the plaintiffs in
that Copeland’s of New Orleans, Inc. (Copeland’s) acquiesced in the plaintiffs’
failure to obtain the proper approvals under the franchise agreement. Had Copeland’s continued to acquiesce, and certainly it had the right to do so, no litigation would
have been forthcoming.
Where I disagree with the majority is in the determination that the acts
occurring after January 29, 1997, do not form the basis for a cause of action under
LUTPA. The majority acknowledges that the plaintiffs’ January 29, 1998 suit is
timely for all acts occurring after January 29, 1997, and identifies three such acts: (1)
the acquisition by Copeland’s of the October 1997 temporary restraining order, (2)
the filing by Copeland’s of the November 18, 1997 petition to modify the arbitration
award, and (3) the filing by Copeland’s of the March and April 1998 involuntary
bankruptcy proceedings. The majority then concludes, as a matter of law, that these
do not constitute LUTPA violations. Notably, the majority does not even consider
the impact on the LUTPA issues of Copeland’s actions in sending the February and
March 1997 default letters.
As stated, this matter is before us on the grant of a summary judgment. We
review summary judgments de novo under the same criteria that govern the trial
court’s consideration of whether to grant or reject a motion for summary judgment in
a particular case. Cormier v. Albear, 99-1206 (La.App. 3 Cir. 2/2/00), 758 So.2d 250.
The summary judgment procedure is now favored in the law and “is designed to
secure the just, speedy, and inexpensive determination of every action, except those
disallowed by Article 969.” La.Code Civ.P. art. 966(A)(2). If there is no genuine
issue as to material fact and the mover is entitled to judgment as a matter of law, the
motion for summary judgment “shall be granted.” La.Code Civ.P. art. 966(C)(1).
Thus, despite the fact that summary judgments are now favored in the law, the
existence of genuine issues of material fact precludes the grant of such relief.
2 In the matter now before us, I am concerned that the trial court and the majority
of this court reached their respective conclusions by resolving genuine issues of
material fact. Louisiana Revised Statutes 51:1405(A) makes unlawful all “[u]nfair
methods of competition and unfair or deceptive acts or practices in the conduct of any
trade or commerce.” The language of that statute is intended to be broad, and
whether a particular act constitutes an unfair trade practice is to be determined on a
case-by-case basis on the facts of each case. Bobby & Ray Williams P’ship, L.L.P.
v. Shreveport La. Hayride Co., 38,224 (La.App. 2 Cir. 4/21/04), 873 So.2d 739, writ
denied, 04-1215 (La. 10/8/04), 883 So.2d 1022; Jarrell v. Carter, (La.App. 1 Cir.),
writ denied, 582 So.2d 1311 (La.1991). However, factual determinations in the
context of a particular situation are reserved for a trial on the merits and are not to be
determined in a summary judgment proceeding.
The cause of action afforded a private citizen under La.R.S. 51:1409(A) is
triggered when the person “suffers any ascertainable loss of money.” In the matter
before us, that did not occur until Copeland’s issued the February and March 1997
default letters. The supreme court explained the cause of action concept in
Everything on Wheels Subaru, Inc. v. Subaru South, Inc., 616 So.2d 1234, 1283, as
follows:
In Trahan v. Liberty Mutual Insurance Company, 314 So.2d 350, 353 (La.1975), this court defined cause of action as “an act by a defendant which gives a plaintiff a right to invoke judicial interference on his behalf.” The court pointed out the difference between a demand, which is “the object of the suit,” and a cause of action, which is “the state of facts which gives a party a right to judicially assert an action against the defendant.” Thus, cause of action, as used in the context of the peremptory exception, means the operative facts which give rise to the plaintiff’s right to judicially assert the action against the defendant.
(Footnotes omitted.)
3 In the matter now before us, the plaintiffs had no right to invoke judicial interference
on their behalf until February of 1997. Suit was filed within one year of that time.
Additionally, I find nothing in LUTPA that provides as a matter of law that
judicial proceedings cannot be the basis of a LUTPA suit. As stated in Jarrell, 577
So.2d at 123, “[i]t has been held that a practice is unfair when it offends established
public policy and when the practice is unethical, oppressive, unscrupulous, or
substantially injurious.” In that regard, the basic material factual dispute revolves
around the state of mind of those representing Copeland’s. State of mind issues often
involve matters such as fraud, misrepresentation, and deception. While I recognize
that the supreme court in Jones v. Estate of Santiago, 03-1424 (La. 4/14/04), 870
So.2d 1002, acknowledged that there are situations in which motive, intent, good
faith, knowledge, or malice can be considered in a summary judgment context, it
limited such considerations to situations in which no issue of material fact exists
regarding such intent. The supreme court further explained that such determinations
are “seldom appropriate” in a summary judgment situation. Id. at 1006.
In this matter, we are clearly left with genuine issues of material fact, and
Copeland’s in not entitled to dismissal of the plaintiffs’ LUTPA cause of action as a
matter of law.
For the same reasons set forth above, I disagree with the trial court’s and the
majority’s determination that the plaintiffs cannot be successful in establishing the
elements required by 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228 (La.1989). To
reach such a conclusion, the trial court and this court were required to make factual
determinations prohibited in a summary judgment proceeding.
I would reverse the grant of the summary judgment with regard to both causes
4 of action and remand this matter to the trial court for further proceedings.
5 NUMBER 04-1483 C/W 04-1484, 04-1485, 04-1486
COURT OF APPEAL, THIRD CIRCUIT
STATE OF LOUISIANA
AMY, J., concurring.
I agree that an affirmation is required. With regard to claims allegedly arising
under the Louisiana Fair Trade Practices Act, I find that they were either perempted
or without merit and, therefore, subject to dismissal through summary judgment. Like
the lead opinion, I find the continuing tort doctrine inapplicable as the limitation
period at issue is one of peremption rather than prescription. Peremptive periods
cannot be interrupted or suspended and application of the continuing tort doctrine to
the period would do just that. Absent the continuing tort theory, each action must be
viewed as individual and should be recognized as beginning its own peremptive
period. Simply, as suit was filed on January 29, 1998, it was not timely as to any
action occurring prior to January 29, 1997. Any actions occurring after that date do
not constitute LUTPA violations and were, therefore, appropriate for summary
judgment.