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Stewart v. H & E Equipment Services, Inc.

United States District Court, M.D. Louisiana

January 27, 2017




         Before the Court is Plaintiff's Motion for Partial Summary Judgment. (R. Doc. 37). The motion is opposed. (R. Doc. 46). Plaintiff has filed a Reply. (R. Doc. 52).

         Also before the Court is Defendant's Motion for Summary Judgment (R. Doc. 47). The motion is opposed. (R. Doc. 55). Defendant has filed a Reply. (R. Doc. 64). Plaintiff has filed a Surreply. (R. Doc. 67).

         As the parties' motions for summary judgment concern the same issues and arguments, the Court considers them together in a single ruling.

         I. Procedural History and Background

         David A. Stewart (“Plaintiff” or “Employee”) was employed by H&E Equipment Services, Inc. (“Defendant, ” “Company, ” or “H&E”), or its predecessor, beginning in July 1993. Plaintiff sold cranes and supervised others selling cranes for Defendant. On or about February 15, 2013, in light of Plaintiff's promotion to branch manager of Defendant's Birmingham branch, the parties entered into an employment contract titled “Retainer, Confidentiality and Non-Competition Agreement.” (R. Doc. 1-1, “Agreement”).

         In its preamble, the Agreement states that “in consideration of: (1) continued employment by H&E of Employee on an at-will basis subject to the provisions of Section 5(d) below;[1] (2) promotion to the position of Branch Manager, and an increase in base salary; and (3) H&E's further agreement to provide Employee with access to confidential Company information and data, Employee hereby agrees [to the following five Sections of the Agreement].”

         Most relevant to this dispute are the Sections governing non-competition covenants (Section 2) and continuing compensation (Section 4). Section 2(a) of the Agreement provides the following, with emphasis added:

During Employee's employment by Company and for a period of twelve (12) months immediately following the termination of Employee's employment for any reason whatsoever, whether or not for cause, Employee will not, directly or indirectly (whether through affiliates, relatives or otherwise) [engage in certain activities consisting of competition or solicitation].

         Section 2(c) of the Agreement provides the following, with emphasis added:

Before taking any position with any person or entity during the twelve-month period following the termination of Employee's employment for any reason, with or without cause, Employee will give prior written notice to Company of the name of such person or entity.

         Section 4(a) of the Agreement provides the following, with emphasis added:

In the event Employee's employment is terminated by Company without cause, the provisions of Section 2 above shall apply and, as consideration therefor, Company shall pay to Employee, every two weeks one-twenty sixth (1/26th) of the total compensation paid to Employee by Company during the twelve-month period immediately preceding termination of Employee's employment.

         The parties dispute whether Plaintiff was fired without cause as required by Section 4(a) for the payment of compensation continuation and whether Defendant's duty to pay compensation continuation is dependent on Defendant's enforcement of its rights to non-competition and non-solicitation pursuant to Section 2 of the Agreement.

         Defendant terminated Plaintiff's employment on or about May 1, 2015.[2] At that time, Defendant presented Plaintiff with a document titled “Separation Agreement and Release.” (R. Doc. 1-2). Through this document, Defendant offered to pay Plaintiff severance in the amount of $50, 000 for the release of any legal rights Plaintiff may have against Defendant. (R. Doc. 1-2 at 1). If Plaintiff agreed to sign the release, the release would have effectively superseded the Agreement, with the exception that it would “not impact or affect any restrictive covenants between [Plaintiff] and the Company such as any non-competition promises, non-solicitation promises, or confidentiality promises.” (R. Doc. 1-2 at 3). Plaintiff did not sign the release.

         On May 12, 2015, Defendant confirmed in writing that Plaintiff refused to sign the release, further stating its position that it would not pay continued compensation pursuant to Section 4 of the Agreement because it would not enforce Plaintiff's non-compete and non-solicitation obligations in Section 2 of the Agreement. (R. Doc. 47-9).

         On August 3, 2015, Plaintiff initiated this action, alleging that Defendant terminated his employment “without cause” and, accordingly, he is entitled to $169, 302.73 pursuant to the terms of Section 4(a) of the Agreement. (R. Doc. 1).[3]

         On December 10, 2015, Plaintiff filed his first Motion for Summary Judgment. (R. Doc. 16). Plaintiff argued that based on the plain language of Paragraph 4(a) of the Agreement, Defendant breached the contract and he is entitled to the 12 months of continued compensation sought. The Court denied the motion as premature pursuant to Rule 56(d), holding that Defendants were entitled to conduct discovery regarding the events concerning Plaintiff's termination, as well as regarding the formation and interpretation of language in the Agreement. (R. Doc. 32).

         On August 3, 2016, after the close of non-expert discovery, Plaintiff filed the instant Motion for Partial Summary Judgment, which seeks summary judgment on all issues with the exception of damages. (R. Doc. 37). Plaintiff argues that there is no dispute that he was terminated “without cause” because Defendant has admitted that Plaintiff's “employment was not terminated because of any specific act of ‘wrongdoing, misconduct or misfeasance.'” (R. Doc. 37-1 at 2). Plaintiff further argues that there is no dispute that he complied with the requirements of the compensation continuation provisions in Paragraph 4(a) by refraining from competing with Defendant while employed and for a full year following termination. (R. Doc. 37-1 at 5). Plaintiff does not seek summary judgment on the issue of damages, arguing that the parties dispute the specific amounts of compensation, attorneys' fees and costs to which Plaintiff is entitled. (R. Doc. 37 at 1).

         On September 23, 2016, Defendant filed its Motion for Summary Judgment, which seeks dismissal of the action in its entirety. (R. Doc. 47). Defendant argues that the compensation continuation provision in Paragraph 4(a) is unenforceable because there is no dispute that Defendant advised Plaintiff at the time of his termination that it would not enforce the non-compete and non-solicitation provisions of the Agreement. (R. Doc. 47-1 at 5-7). In addition, Defendant argues that the term “cause” in the contract should be interpreted by its ordinary dictionary meaning, and that Defendant properly terminated Plaintiff because of his performance in the service department. (R. Doc. 47-1 at 7-9). Finally, Defendant argues that Plaintiff has not demonstrated that he suffered any damages because he did not seek another position after his employment terminated despite being informed that Defendant would not enforce the non-complete and non-solicitation provisions of the Agreement. (R. Doc. 47-1 at 9-10).

         II. Law and Analysis

         A. Summary Judgment Standard

         Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact.” Fed.R.Civ.P. 56(a). The party seeking summary judgment carries the burden of demonstrating that there is an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). When the burden at trial rests on the non-moving party, the moving party need only demonstrate that the record lacks sufficient evidentiary support for the non-moving party's case. Id. The moving party may do this by showing that the evidence is insufficient to prove the existence of one or more essential elements of the non-moving party's case. Id. A party must support its summary judgment position by “citing to particular parts of materials in the record” or “showing that the materials cited do not establish the absence or presence of a genuine dispute.” Fed.R.Civ.P. 56(c)(1).

         Although the Court considers evidence in a light most favorable to the non-moving party, the non-moving party must show that there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). Conclusory allegations and unsubstantiated assertions will not satisfy the non-moving party's burden. Grimes v. Tex. Dep't of Mental Health, 102 F.3d 137, 139-40 (5th Cir. 1996). Similarly, “[u]nsworn pleadings, memoranda or the like are not, of course, competent summary judgment evidence.” Larry v. White, 929 F.2d 206, 211 n.12 (5th Cir. 1991). If, once the non-moving party has been given the ...

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