Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Swift Energy Operating, L.L.C. v. Plemco-South, Inc.

Court of Appeal of Louisiana, Third Circuit

February 4, 2015

SWIFT ENERGY OPERATING, L.L.C.
v.
PLEMCO-SOUTH, INC., ET AL

APPEAL FROM THE THIRTY-THIRD JUDICIAL DISTRICT COURT, PARISH OF ALLEN, NO. C-2011-491. HONORABLE H. WARD FONTENOT, DISTRICT JUDGE A.D. HOC.

AFFIRMED.

Stephen D. Marx, Chehardy, Sherman, Ellis, Murray, Recile, Griffith, Stakelum & Hayes, LLP, Metairie, LA, COUNSEL FOR DEFENDANT/APPELLANT: Factor King, LLC.

Craig R. Hill, Jones & Hill, Oberlin, LA, COUNSEL FOR DEFENDANT/APPELLANT: Factor King, LLC.

Thomas P. LeBlanc, Loftin, Cain & LeBlanc, L.L.C., Lake Charles, LA, COUNSEL FOR PLAINTIFF/APPELLEE: Swift Energy Operating, LLC.

Court composed of Jimmie C. Peters, Marc T. Amy, and Shannon J. Gremillion, Judges.

OPINION

Page 1155

[14-968 La.App. 3 Cir. 1] PETERS, J.

Factor King, LLC (Factor King), who is both defendant and plaintiff-in-reconvention in this litigation, appeals a trial court judgment denying its motion for summary judgment and granting the motion for summary judgment of plaintiff and defendant-in-reconvention, Swift Energy Operating, LLC (Swift Energy), and dismissing all claims by Factor King against Swift Energy. For the following reasons, we affirm the trial court judgment in all respects.

DISCUSSION OF THE RECORD

The facts are not in dispute and are set out in the affidavits, attachments, and stipulations presented to the trial court in support of, and in opposition to, the summary judgment motions. Although the litigation before us is between Factor King and Swift Energy, it originates from a contractual relationship between Swift Energy and Plemco-South,[1] an Oakdale, Louisiana oilfield service company. On April 1, 2002, Swift Energy,[2] which is a Houston, Texas oil and gas exploration company, and Plemco-South entered into a Master Service Agreement, whereby Plemco-South agreed to provide goods, services, and rental equipment to Swift Energy for use in its business activities in

Page 1156

exchange for payment by Swift Energy. The process for payment of Plemco-South's invoices was simple. When the goods, services, and/or rental equipment were provided, Plemco-South would submit the appropriate documentation to Swift Energy's field supervisor, who would approve the charges and forward the documentation to Swift Energy's Houston, Texas [14-968 La.App. 3 Cir. 2] corporate headquarters for approval by either the Operations Department or the Facilities and Construction Department. After approval by the appropriate department, the documentation would be submitted to the Accounts Payable Department for processing and payment. According to Randy Bailey, Swift Energy's vice-president of Production, Swift Energy has service contracts similar to its contract with Plemco-South in Louisiana and Texas, and the size of its operation requires that the payment procedure be the exclusive method of handling accounts receivable. In its ordinary course of business, it has never been acceptable for an account receivable to be submitted directly to the Accounts Payable Department.

For approximately nine years, the business relationship between Swift Energy and Plemco-South functioned without any problems. This litigation arises because on July 27, 2011, Plemco-South entered into a written Factoring and Security Agreement (Factoring Agreement) with Factor King, a Hauppauge, New York corporation, whereby Plemco-South sold Factor King some of its accounts receivables.[3] In order to assure that Factor King would recover the amount advanced for the purchase, Plemco-South granted Factor King a " continuing first priority" security interest over all of its property of value, including any existing or future acquired accounts receivable.[4] Despite the creation of this security interest under Section 7.1 of the Factoring Agreement, Section 7.2 provides that " [n]otwithstanding the creation of this security interest, the relationship of the [14-968 La.App. 3 Cir. 3] parties shall be that of Purchaser and Seller of accounts, and not that of lender and borrower."

With regard to the authority granted Factor King under the collateral assignment, Section 9 of the Factoring Agreement authorized Factor King to, among other things, accept and deposit on behalf of itself or Plemco-South the " proceeds of any Collateral" and to take steps to collect the accounts made a part of the assignment; to notify the accounts receivable debtor that the collateral assignment existed; and to file any financing statements under Section 9 of the Uniform Commercial Code.

However, the primary obligation under the Factoring Agreement, to notify the account debtor, fell upon Plemco-South. Section 11.3 required Plemco-South to mark any invoice sent to an account debtor with the following notice:

Page 1157

NOTICE OF ASSIGNMENT
ASSIGNED AND PAYABLE ONLY TO:
FACTOR KING, L.L.C. FBO
Plemco-South, Inc.
PO Box 95000-1183
Philadelphia, PA 19105-0001
Any claims, offsets, or disputes
Must be reported immediately to
FACTOR KING 888.919.770

In fact, Jason Gross, president of Factor King, stated, in his affidavit in support of Factor King's motion for summary judgment, that when entering into a factoring arrangement with a party, " [b]efore any money is advanced to any Borrower, the Borrower's customers, the Account Debtors, are put on notice by the Borrower that its accounts receivable have been assigned to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.