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Two Oil Servs., LLC v. Simons Petroleum, LLC

Court of Appeal of Louisiana, Third Circuit

December 10, 2014

TWO OIL SERVICES, LLC
v.
SIMONS PETROLEUM, LLC, ET AL

Heard November 6, 2014.

Circulated December 1, 2014.

Page 678

APPEAL FROM THE THIRTY-EIGHTH JUDICIAL DISTRICT COURT, PARISH OF CAMERON, NO. 1019205. HONORABLE PENELOPE RICHARD, DISTRICT JUDGE.

Michael W. Magner, T.A., Donald W. Washington, Virginia W. Gundlach, Blaire B. Suire, Jones, Walker LLP, New Orleans, Louisiana, COUNSEL FOR DEFENDANT-APPELLANT: Simons Petroleum, LLC.

J. Bryan Jones, III, Attorney at Law, Lake Charles, LA, FOR PLAINTIFF-APPELLEE: Two Oil Services, LLC.

Court composed of Marc T. Amy, Elizabeth A. Pickett, and Billy Howard Ezell, Judges. Amy, J., concurs in the result.

OPINION

Page 679

[14-712 La.App. 3 Cir. 1] PICKETT, Judge.

After a default judgment was confirmed against Simons Petroleum, LLC (Simons), it filed a motion for new trial that the trial court denied. Simons now appeals the default judgment and the denial of its motion for new trial. For the following reasons, the judgment is reversed, and the matter is remanded for further proceedings.

FACTS

In July 1999, Two Oil Services, L.L.C. (Two Oil) entered into a Facilities Utilization Agreement (Utilization Agreement) with J.A. Pallet Company, Inc. and J.C.B. Marine Rentals, Inc. (collectively, Pallet), wherein Pallet granted Two Oil use and access to portions of its shore-based facility in Cameron Parish to put Two Oil's fuel equipment on the facility for the purpose of selling fuel and lubricants. By a Second Addendum, dated February 4, 2000, the original five-year term of the Utilization Agreement was extended until February 28, 2010, with the option to renew for three successive five-year periods upon mutual agreement of the parties as to terms and conditions.

On November 11, 2002, Two Oil and Simons entered into a Purchase, Assignment and Facilities Management Agreement (Assignment and Management Agreement) whereby Two Oil sold all of its fuel and lubricants inventory to Simons, assigned all of its rights in the Utilization Agreement to Simons, and leased its fueling equipment and tankage to Simons. In exchange, Simons agreed to pay Two Oil a 40% share of the net profits from the fuel dock operations and a fee of $0.10 per gallon of lubricant.

[14-712 La.App. 3 Cir. 2] In a Third Addendum to the Utilization Agreement, Pallet agreed that if Simons purchased all of Two Oil's equipment and tankage before February 28, 2010, it could renew the first five-year option on the same terms as provided under the Utilization Agreement, by providing ninety (90) days prior written notice. The second and third renewals remained subject to the parties reaching mutually agreeable terms and conditions as provided in the first and second Utilization Agreements. Two Oil was not a party to the Third Addendum.

On November 30, 2009, Two Oil agreed to sell Simons the equipment it leased to Simons under the Assignment and Management Agreement for a purchase price of $175,000.00, which was represented by a promissory note. The promissory note was payable in quarterly installments of $10,000.00 each on the last day of each quarter beginning March 31, 2010, and continuing on the last day of each quarter

Page 680

until December 31, 2014. At that time, any unpaid principal and interest became due and payable. The promissory note provided for 5% per annum interest, unless any amount was not paid when due. In that event, the unpaid balance would accrue interest at a rate of 10%. Two Oil had the right to declare the entire indebtedness immediately due and payable " if not paid within ten (10) days after written demand."

On June 25, 2013, Two Oil filed this suit against Simons and Pallet. In its petition, Two Oil alleged that Simons' payments on the promissory note were " fully paid until no quarterly payment was received on March 31, 2013" and that because the March 31, 2013 payment was not received, Simons owed Two Oil the balance on the note, $75,459.00, plus 10% per annum interest, reasonable attorney's fees, court costs, and other collection expenses. Two Oil further alleged that Simons was in breach of its contracts and in breach of the fiduciary [14-712 La.App. 3 Cir. 3] responsibility it owed Two Oil for failing to secure renewal of the Utilization Agreement and failing to ensure that its operations continued.

On July l, 2013, Simons was served through its agent for service of process. Simons did not file an answer or otherwise respond to the suit, and a preliminary default was on November 19, 2013. Thereafter, on December 11, 2013, a confirmation hearing was held. At the conclusion of the hearing, judgment confirming the default was rendered in favor of Two Oil. The judgment awarded Two Oil $75,459.00, plus 10% interest per year, beginning January 1, 2013, and attorney's fees in the amount of $20,618.85, plus legal interest from the date of the judgment on the promissory note. The judgment also awarded Two Oil damages in the amount of $1,064,469.00, plus legal interest from the date of judicial demand on its breach of contract claim and all costs of the proceeding.

Simons filed a motion for new trial and to set aside the default judgment and peremptory exceptions of prescription and no cause of action. After a hearing, the trial court denied the motion for new trial and the exceptions. Simons appealed the judgment.

ASSIGNMENTS OF ERROR

Simons' appeal presents the following ...


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