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Sarradet v. Riverbend Environmental Services, LLC

United States District Court, M.D. Louisiana

July 24, 2017

JANIE SARRADET
v.
RIVERBEND ENVIRONMENTAL SERVICES, LLC, ET AL.

          RULING AND ORDER ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

          ERIN WILDER-DOOMES UNITED STATES MAGISTRATE JUDGE

         Before the Court is a Motion for Summary Judgment (the “Motion”), filed by defendants Riverbend Environmental Services, LLC (“Riverbend”), R.E. Services, Inc., Singleton “Mac” McInnis, III (“McInnis”), and Andrew Densing (“Densing”)(collectively, “Defendants”).[1] The Motion is opposed[2] and Defendants have filed a reply.[3]

         For the reasons set forth herein, Defendants' Motion for Summary Judgment is GRANTED in part and DENIED in part. The Motion is DENIED to the extent Defendants seek dismissal of Plaintiff's breach of contract claim concerning Defendants' refusal to recognize that Plaintiff earned a two percent equity interest in Riverbend during the course of her employment. To the extent Defendants seek dismissal of the remainder of Plaintiff's claims for breach of contract, alleged violations of the Louisiana Unfair Trade Practices Act (“LUTPA”) and intentional interference with a contract, the Motion is GRANTED and those claims are DISMISSED with prejudice.[4]

         I. Background

         On or about February 5, 2016, Plaintiff filed a Complaint in this Court against Defendants asserting claims for breach of contract, unpaid wages under Louisiana Wage Payment Statutes (“LWPS”), La. R.S. 23:631, et seq., unfair trade practices under the LUTPA and intentional interference with a contract.[5] Plaintiff alleges that on or about March 29, 2012, she was hired as the Business Development Manager for Riverbend.[6] Riverbend is a limited liability company that owns a landfill in Fayette, Mississippi for the disposal of solid and special waste, as well as three transfer stations in Louisiana and Mississippi where waste is temporarily stored for delivery to the landfill.[7] The initial terms and conditions of the Business Development Manager position were set forth in an offer letter dated March 29, 2012 (the “offer letter”), which the parties ultimately signed.[8] Under the terms of the offer letter, Riverbend agreed to pay Plaintiff an annual base salary of $85, 000, commissions at a rate of two percent on new and existing business and Plaintiff was also eligible to receive a one percent equity interest in Riverbend the first year annual “gross landfill revenue” exceeded $5 million, another one percent equity interest if “annual landfill revenue” reached $6 million, “and at $7m another 0.5 percent equity will be granted to max out at 2.5 percent.”[9]

         The Complaint alleges that in 2014, Riverbend “arbitrarily and capriciously and without cause unilaterally reduced Plaintiff's commission on new and existing business by fifty percent in violation of the written agreement between the parties.”[10] Plaintiff also alleges that Riverbend withheld her commissions and never provided or paid Plaintiff her equity interest in the company when Riverbend obtained the targeted “gross landfill revenue” pursuant to the terms of the offer letter. According to Plaintiff, the Defendants engaged in a “fraudulent bait and switch scheme in which Plaintiff was enticed to come work for Defendants in exchange for monetary incentives once goals were achieved, ” but when Plaintiff reached those goals Defendants refused to perform their obligations under the employment contract.[11] As a result, Plaintiff seeks damages for, among other things, lost income, lost commissions and lost equity interest. Plaintiff also asserts claims against individual defendants McInnis and Densing, the managers of Riverbend, alleging that McInnis and Densing “conspired to perform the bad faith bait and switch scheme, ” which negates any corporate immunity they seek to assert in this case.[12]

         On May 26, 2017, Defendants filed the instant Motion for Summary Judgment.[13]Defendants argue that Plaintiff's breach of contract claims should be dismissed because the undisputed evidence shows that Riverbend did not breach any terms of the offer letter.[14]Defendants also seek dismissal of Plaintiff's remaining claims under the LUTPA and for intentional interference with a contact. First, Defendants contend that because Plaintiff's breach of contract claims fail as a matter of law, Plaintiff's intentional interference with a contract claim necessarily fails, as well.[15] Defendants further assert that McInnis and Densing, as managers of a limited liability company, [16] cannot be held liable for intentional interference with a contract, which is a claim that must be directed at an individual corporate officer.[17] Finally, Defendants assert that Plaintiff's LUTPA claim should be dismissed because it is not within the scope of activity protected by the LUTPA. In opposition, Plaintiff asserts the Motion to Dismiss should be denied because there are genuine issues of material fact with respect to each of the claims raised in her Complaint.[18]

         II. Law and Analysis

         A. Summary Judgment Standard

         Summary judgment shall be granted when the record shows that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). “A dispute regarding a material fact is ‘genuine' if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party.” Moreland v. United States, 3:11-CV-358-L, 2013 WL 3283700, at *1 (N.D. Tex. June 28, 2013) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986)). Once the moving party has demonstrated the absence of a material fact issue, the party opposing summary judgment may not rest on the mere allegations of his pleadings and must come forward with “specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). When considering summary judgment evidence, the court must view all facts and inferences in the light most favorable to the nonmoving party and resolve all disputed facts in favor of the nonmoving party. Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005). However, the court must “not weigh the evidence or evaluate the credibility of witnesses.” Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998).

         B. Genuine Issues of Material Fact Exist with Respect to Plaintiff's Breach of Contract Claim and Whether Plaintiff Earned a Two Percent Equity Interest in Riverbend

         In the Complaint, Plaintiff asserts that she earned a one percent equity position in Riverbend for the year 2013 and earned another one percent equity position in Riverbend for the year 2014 because gross landfill revenues exceeded the targets established in the offer letter in those years. Plaintiff relies on Defendants' financial documents which show that Riverbend's “Total Income/Gross Profit” was $5, 201, 036.88 in 2013 and $6, 239, 365.88 in 2014.[19] Defendants counter that Plaintiff did not earn any equity interest in Riverbend because Plaintiff erroneously relies upon Riverbend's gross revenue without the deduction of transfer station expenses.[20] Although the offer letter does not define the phrase “gross landfill revenue, ” nor specify the manner in which “gross landfill revenue” is to be calculated, Defendants have submitted a Declaration from Densing to show that Defendants intended for the amount to be calculated by deducting the transfer station expenses, which is why the qualifying word “landfill” was included in the offer letter.[21]

         All parties rely on the offer letter with regard to their arguments about whether or not Plaintiff should have a two percent equity position in Riverbend. The offer letter states the following with regard to Plaintiff acquiring an equity position:

4. Equity: The first year the company exceeds $5m in gross landfill revenue the company will offer a 1 percent equity position. At $6m annual landfill revenue, another 1 percent will be granted, and at $7m another 0.5 percent equity will be granted to max out at 2.5 percent.[22]

         The parties also agree that whether Plaintiff is entitled to a two percent equity position in Riverbend turns on the meaning of the phrase “gross landfill revenue.”

         A federal court sitting in diversity applies the substantive laws of the forum state. Learmonth v. Sears, Roebuck and Co., 710 F.3d 249, 258 (5th Cir. 2013)(citations omitted).

Under Louisiana law, a contract is ambiguous when the contract is ‘uncertain as to the parties' intentions and susceptible to more than one reasonable meaning under the circumstances and after applying established rules of construction.' Shocklee v. Massachusetts Mut. Life Ins. Co., 369 F.3d 437, 440 (5th Cir. 2004), citing In re Liljeberg Enterprises, Inc., 304 F.3d 410, 440 (5th Cir. 2000) (internal quotation marks and citations omitted). When a contract is ambiguous, ‘the agreement shall be construed according to the intent of the parties.' Guidry v. American Public Life Ins. Co., 512 F.3d 177, 181 (5th Cir. 2007), citing Kuswa & Assocs., Inc. v. Thibaut Constr. Co., 463 So.2d 1264, 1266 (La.1985). ‘Intent is an issue of fact which is to be inferred from all of the surrounding circumstances.' Guidry, 512 F.3d at 181, citing Kuswa & Assoc., 463 So.2d at 1266 (emphasis added); see also Liberty Mut. Ins. Co. v. Pine Bluff Sand & Gravel Co., 89 F.3d 243, 246 (5th Cir. 1996) (‘[A]mbiguity in the terms of a contract gives rise to a fact question concerning the intent of the parties.'). Therefore, the Fifth Circuit has held ‘when a contract is ambiguous, the trier of fact must resolve the factual issue of intent, and judgment on the pleadings or summary judgment is improper.' Guidry, 512 F.3d at 181, citing Investors Syndicate of Am., Inc. v. City of Indian Rocks Beach, 434 F.2d 871, 877-78 (5th Cir. 1970) (finding that dismissal on the pleadings was error when the contract at issue was ambiguous); Gertler v. City of New Orleans, 881 So.2d 792, 796 (La.Ct.App. 2004) (‘If the language of [a contract] is ambiguous or susceptible to multiple interpretations, the intent of the parties must be determined and summary judgment is inappropriate.').”

Drill Cuttings Disposal Co. v. Kem-Tron Techs., Inc., No. CIVA 08-1837, 2010 WL 1005923, at *2 (W.D. La. Mar. 15, 2010).

         Applying these rules to the provision of the offer letter regarding Plaintiff's acquisition of an equity interest in Riverbend precludes summary judgment in favor of Defendants. The offer letter does not specify the manner in which “gross landfill revenue” is to be calculated. While Plaintiff states she believed the phrase “gross landfill revenue” referred to Riverbend's “Total Income” or “Gross Profit, ” Defendants believed that “gross landfill revenue” referred to Riverbend's annual gross revenue less transfer station expenses.[23] Although Defendants allege that, “Densing intended to deduct transfer station expenses when calculating annual gross landfill revenue for purposes of evaluating any equity position under the offer letter, ”[24] the only evidence of that intent is contained in Densing's self-serving Declaration that was submitted with the Motion for Summary Judgment.[25]

         “Gross revenue” is defined as “receipts of a business before deductions for any purpose except those items specifically exempted.” Gross revenue, Black's Law Dictionary (6th ed.) The phrase “net revenues” refers to “net income or net profits.” Net revenues, Id. “Net profits” is defined as “Profits after deduction of all expenses; may be classified as net before or after taxes. Deducting the cost of goods sold from sales gives the gross profit. Deducting the operating expenses (overhead) from gross profit gives the operating profit. Deducting income taxes from operating profits gives the net profit. Net Profits, Id. (emphasis in original).

         It is not evident from the face of the offer letter that the word “landfill” was a qualifying word used to limit the meaning of “gross revenue” to the revenue generated by the landfill less the transfer station expenses. Defendants stress that, “Under Louisiana law, every word in a contract should be given full effect in the absence of absurd results” and that Plaintiff's interpretation of the phrase “gross landfill revenue” fails to give effect to the qualifying word “landfill.”[26] However, Defendants' interpretation of “gross landfill revenue” similarly fails to give meaning to the qualifying word “gross, ” which implies that the amount would be calculated without making any deductions. This ambiguity precludes summary judgment on the issue of whether Plaintiff earned a two percent equity interest in Riverbend.[27]

         C. Defendants are Entitled to Summary Judgment on the Remainder of Plaintiff's Claims

         1. Plaintiff's Breach of Contract Claims Regarding Commissions

         Plaintiff alleges Defendants breached the terms of the offer letter with regard to commission payments in two ways: 1) by calculating commissions on revenue for waste deposited less transfer station expenses; and 2) by reducing her commission rate from the 2% rate contained in the offer letter to 1% in July 2014.

         a. Plaintiff's Breach of Contract Claim Regarding the Calculation of Plaintiff's Commission

         With regard to whether Plaintiff's commissions should have been calculated before or after reduction for transfer station expenses, Defendants claim that they always intended for Plaintiff's commissions to be calculated using the “gross landfill revenue, ” which according to Defendants is the revenue for waste deposited at the transfer stations less the transfer station expenses, plus the revenue for waste deposited directly at the Fayette Landfill less tonnage taxes.[28] Defendants assert that the offer letter did not specify how the commissions would be calculated and under Louisiana law, “a doubtful provision must be interpreted in light of the nature of the contract, equity, usages, [and] the conduct of the parties before and after the formation of the contract . . . .” La. Civ. Code art. 2053. According to Defendants, Plaintiff received her first commission payment on October 18, 2012, for the month of September 2012, along with a worksheet detailing the calculation of her commission payment, which specified that transfer station expenses were being deducted from the commissions.[29] Defendants claim that Plaintiff testified during her deposition that upon receiving that commission worksheet, Plaintiff asked Densing about the deduction of transfer station expenses, and that Densing explained that the commissions were calculated based on the “gate rate, ” which is determined by deducting transfer station expenses.[30]

         Despite Plaintiff's knowledge that transfer station expenses were being deducted from her commission payments, Plaintiff continued to accept the commission payments as calculated by Densing without further argument. As with Plaintiff's first commission payment, Defendants have submitted evidence in support of the Motion to show that every subsequent commission payment included a worksheet detailing the commission calculation for the applicable month (showing a reduction for transfer station expenses).[31] Plaintiff received approximately 36 commission payments, [32] totaling over $123, 000, during the nearly three and a half years of her employment with Riverbend.[33] According to Defendants, Louisiana courts have rejected a plaintiff's claim for additional compensation based on alleged miscalculations of their compensation under similar circumstances.[34] As such, Defendants contend Riverbend did not breach the terms of Plaintiff's offer letter by deducting transfer station expenses from her commission payments. Plaintiff argues that Defendants seek to improperly use parole evidence to vary the terms of the offer letter.[35]

         Louisiana courts have rejected a plaintiff's claim for additional compensation where the plaintiff did not challenge the salary calculation until after his employment was terminated. In Gamble v. D.W. Jessen & Associates, the plaintiff sought an award for back compensation based upon the alleged miscalculation of his salary during his 30 years of employment with the defendant law firm. 509 So.2d 1041, 1042 (La.App. 3 Cir. 1987). The Gamble court pointed out that plaintiff had never questioned the method by which his salary was calculated even though, “Mr. Gamble periodically reviewed with the accountants the financial information of the business and had complete access to all of the business records of the firm located at the office, which he also reviewed from time to time.” Id. at 1043. The court held that, “One of the best ways to determine what the parties intended in a contract is the method in which the contract is performed, particularly if done consistently over and over again for a period of many years.” Id. (citations omitted); See, Total Minatome Corp. v. Union Texas Products Corp., 33, 433 (La.App. 2 Cir. 8/23/00), 766 So.2d 685, 689 (same); Spohrer v. Spohrer, 610 So.2d 849 (La.App. 1 Cir. 1992) (same). In Gamble, the court found that the plaintiff had accepted his salary based on the calculations rendered by an accountant and that it was only after the parties had dissolved their relationship that Mr. Gamble objected to the method of calculation. The court ultimately concluded that, “[S]ince Mr. Gamble drew his agreed upon salary throughout the existence of the relationship between the parties, his claim for additional compensation should be and the same is hereby denied.” 509 So.2d at 1043.

         The plaintiff in Forest v. Roy similarly alleged that he had been underpaid during the 12 years that he had practiced medicine with the defendant. 2011-1463, 2012 WL 1108882, at *1 (La.App. 3 Cir. 4/4/12). The court in Forest found no manifest error in the trial court's decision denying plaintiff's claim for unpaid wages. 2012 WL 1108882, at *2. The trial court had found that although the plaintiff had access to the financial records of the medical clinic where he was employed, the plaintiff did not question the calculation of his compensation until after he decided to leave the clinic. Id. The trial court concluded that, “The calculation of Dr. Forest's compensation did not waiver over the course of his relationship with The Urology Clinic and Dr. Roy. Therefore, his claim for compensation for the time period January 1, 1997 through December 31, 2007 is hereby denied.” Id. On appeal, the Forest court held, “Dr. Forest, a stockholder, officer, and director of the corporation which employed him, had access to all financial records and had the opportunity, routinely, to study and question the calculation of his compensation. He chose not to do so. We cannot say the trial court erred in rejecting his claims.” Id.

         In the instant case, the offer letter does not specify the method for calculating Plaintiff's monthly commission payments. Thus, the contract contains “a doubtful provision” that “must be interpreted in light of the . . . conduct of the parties.” La. Civ. Code art. 2053. The conduct of the parties before and after formation of Plaintiff's employment contract demonstrates that the parties intended for Plaintiff's commission to be calculated by deducting the transfer station expenses. Plaintiff testified during her deposition that she realized the transfer station expenses would be deducted from her monthly commission payments when she received her first commission payment in October 2012 and a worksheet showing how her commission was calculated.[36]Plaintiff also testified that she received a similar worksheet with every commission payment that she received, which totaled 36 during the course of her employment with Riverbend.[37] It is also undisputed that with the exception of the first commission payment received in October 2012, Plaintiff did not object to any of the remaining 35 commission payments that she received from Riverbend. As in Gamble and Forest, Plaintiff accepted each of the 36 commission payments that she received and did not challenge the calculation those payments until after her employment with Riverbend was terminated. By accepting the commission payments, Plaintiff acquiesced to the method ...


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