United States District Court, E.D. Louisiana
PAN AMERICAN LIFE INSURANCE CO., INDIVIDUALLY AND AS A PARTNER IN PANACON
LOUISIANA ACQUISITIONS CORP. AND INTER-CONTINENTAL HOTELS CORP.
ORDER AND REASONS
ZAINEY UNITED STATES DISTRICT JUDGE
following motions are before the Court: Motion for Partial
Summary Judgment (Rec. Doc. 306) filed by Inter-Continental
Hotels Corp.; Motion for Summary Judgment (Rec. Doc. 308)
filed by Louisiana Acquisitions Corp.; Motion for Summary
Judgment Against Inter-Continental Hotels Corp. (Rec. Doc.
345) filed by Plaintiff, Pan American Life Insurance Co.;
Motion for Summary Judgment Against Louisiana Acquisitions
Corp. (Rec. Doc. 347) filed by Plaintiff, Pan American Life
Insurance Co. (“PALIC”); Motion to Strike the
Declaration of Robert Patterson (Rec. Doc. 367) filed by
Defendants, Inter-Continental Hotels Corp. and Louisiana
motions are opposed. The motions, submitted on June 28, 2017
and July 12, 2017, are before the Court on the briefs without
oral argument. For the reasons that follow, Defendants'
motions are GRANTED with the exception of the motion to
strike, which is MOOT. Plaintiffs motions are DENIED.
a diversity action for breach of contract, breaches of
fiduciary duties owed between partners, fraud, conversion,
civil conspiracy, deceptive or unfair trade practices, and
unjust enrichment arising out of the parties' operation
and management of, and relationship to, the New Orleans
Inter-Continental Hotel located in downtown New Orleans
(referred to at times as “the Hotel”). (Rec. Doc.
17, SSAC ¶ 1).
and Louisiana Acquisitions Corp. ("LAC”) formed a
Louisiana partnership called PANACON on June 4, 1981, for the
purpose of designing, building, and operating a luxury hotel
in New Orleans. (SSAC ¶ 9). PALIC owned
a two-thirds (2/3) interest in PANACON and LAC owned the
other one-third (1/3). (Id. ¶
10). The hotel opened in 1983 under the Inter-Continental
brand name. (Id. ¶ 12). LAC is
a wholly-owned subsidiary of Inter-Continental Hotels Corp.
("IHC”) and the two entities operate as commonly
controlled business entities. (Id.
PANACON partnership entered into an Operating and Management
Agreement ("the Management Agreement”) with IHC to
manage the Hotel. (SSAC ¶ 13). Later,
LAC became manager of the Hotel pursuant to an assignment
from IHC. PALIC claims that over the years LAC and IHC used
the Management Agreement as a lucrative vehicle to
double-charge or over-charge PANACON for services to the
detriment of the partnership and PALIC, while garnering
significant profits for Defendants. PALIC contends that
Defendants failed to perform certain obligations owed under
the Management Agreement, which inured to Defendants'
financial gain but hurt the Hotel's ability to compete as
a luxury hotel. PALIC also alleges that Defendants
surreptitiously competed against PANACON by operating other
hotels in the local market. Thus, according to PALIC, LAC and
IHC maximized their profits not through their one-third
ownership of PANACON but rather by abusing the Management
Agreement - a scheme that produced profits for Defendants
regardless of whether the hotel itself was profitable. PALIC
complains that Defendants' strategy resulted in PALIC
receiving no profits on its investment for years at a time.
2005, PALIC began to take steps to sell the underperforming
hotel. (SSAC ¶ 40). PALIC alleges a
plethora of acts that Defendants are accused of committing in
order to thwart the sale of the Hotel, which again was
allegedly losing money for PALIC but proving quite profitable
to the January 2013 sale of the Hotel, PALIC became aware of
some of the very conduct by Defendants that PALIC is
complaining about in this action. (SSAC
¶ 18). According to PALIC, Defendants
demanded that PANACON and PALIC execute two documents, a
Side-Letter Agreement (Rec. Doc. 24-4, Exhibit C) and a
Voluntary Termination Agreement (Rec. Doc. 24-5, Exhibit D) -
documents that PALIC describes as including
"a purported release" of
PALIC's claims for breaches of the Management Agreement
and fraud (Id. ¶¶ 19-20)
- as a condition for their agreement to the pending sale of
the Hotel. These documents were executed in December 2012.
PALIC contends that Defendants insisted on the releases
because Defendants knew that they had been discovered in
their fraudulent scheme and that PALIC was forced to agree to
the releases because of economic duress in light of its
eagerness to finally sell the unprofitable hotel.
(Id. && 65, 75).
initiated this action, individually and as a partner in
PANACON, against LAC and IHC on July 9, 2013, with a 149
paragraph complaint. Defendants initially responded with a
Rule 12(b)(6) Motion to Dismiss (Rec. Doc. 24). On December
20, 2013, the Court granted in part and denied in part that
motion, concluding that most of Defendants' arguments
could not be resolved on the pleadings (Rec. Doc. 37). After
that ruling, PALIC ostensibly had the following remaining
claims in this lawsuit: breach of contract (Count I), breach
of fiduciary duty (Count II), fraud (Count III), civil
conspiracy (Count IV), conversion (Count V), unfair trade
practices (Count VI), unjust enrichment (Count VII), and
alter ego (Count VIII).
fact discovery ensued after the Court declined to dismiss the
case on the pleadings alone. The record reflects that
discovery has not proceeded smoothly. Counsel have appeared
for motion hearings before the magistrate judge on ten
separate occasions (Rec. Docs. 93, 116, 124, 144, 151, 214,
229, 271, 338, 399). Counsel have appeared in this
Court's chambers on numerous separate occasions. Through
significant motion practice over the last four years,
Defendants have whittled away at Plaintiff's case,
narrowing the remaining issues and claims to breach of
fiduciary duty, fraud, conversion, and LUTPA.
LAC and IHC now move for summary judgment as to all remaining
claims. Additionally, Defendants move to strike the
declaration of Robert Patterson.PALIC has also filed two
motions for summary judgment.
motions are addressed in turn below.
judgment is appropriate only if "the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, " when
viewed in the light most favorable to the non-movant,
"show that there is no genuine issue as to any material
fact." TIG Ins. Co. v. Sedgwick James, 276 F.3d
754, 759 (5th Cir. 2002) (citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249-50 (1986)). A dispute
about a material fact is "genuine" if the evidence
is such that a reasonable jury could return a verdict for the
non-moving party. Id. (citing Anderson, 477
U.S. at 248). The court must draw all justifiable inferences
in favor of the non-moving party. Id. (citing
Anderson, 477 U.S. at 255). Once the moving party
has initially shown "that there is an absence of
evidence to support the non-moving party's cause, "
Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986),
the non-movant must come forward with "specific
facts" showing a genuine factual issue for trial.
Id. (citing Fed.R.Civ.P. 56(e); Matsushita Elec.
Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986)).
Conclusional allegations and denials, speculation, improbable
inferences, unsubstantiated assertions, and legalistic
argumentation do not adequately substitute for specific facts
showing a genuine issue for trial. Id. (citing
SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993)).
faced with a well-supported motion for summary judgment, Rule
56 places the burden on the non-movant to designate the
specific facts in the record that create genuine issues
precluding summary judgment. Jones .v Sheehan, Young,
& Culp, P.C., 82 F.3d 1334, 1338 (5th
Cir. 1996). The district court has no duty to survey the
entire record in search of evidence to support a
non-movant's position. Id. (citing Forsyth
v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1992);
Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300, 1307
(5th Cir. 1988)).
Motion for Summary Judgment
contends that discovery has confirmed what LAC has been
arguing since it first filed its Rule 12(b)(6) motion to
dismiss nearly four years ago-that PALIC fully and finally
released all of the claims asserted in this lawsuit when it
executed the Side-Letter Agreement (“SLA”) in
exchange for nearly half a million dollars and LAC's
cooperation in terminating the Management Agreement before
its term expired. LAC contends that discovery has also
demonstrated that PALIC has no viable defenses,
i.e., fraudulent inducement and economic duress, to
the enforceability of that compromise. Even if not
compromised and released, LAC argues that PALIC's
remaining claims are prescribed nonetheless or otherwise
filed its motion for summary judgment in October of last
year, and the motion was continued to its current submission
date for various reasons. In April of this year, LAC filed a
supplemental memorandum in support (Rec. Doc. 342) based on
documents that PALIC fought long and hard to avoid
producing. These documents, filed under seal, reveal
the email communications between PALIC's principals,
PALIC's hotel experts, and the attorneys who represented
PALIC and PANACON in the weeks leading up to the sale of the
hotel and the execution of the SLA. (Rec. Doc. 342-1, Exhibit
A-Sealed). LAC contends that these communications demonstrate
that PALIC understood without question that it was releasing
the claims that it eventually brought in this lawsuit, and
that it did so with a full appreciation of the implications
of the release. LAC argues that PALIC escaped dismissal at
the Rule 12(b)(6) stage by concocting a false litigation
narrative that constitutes a colossal fraud upon the Court.
LAC contends that PALIC's claims of economic duress and
fraudulent inducement have now been exposed as blatant lies
that PALIC and its attorneys have pressed for four years in
order to keep this case alive.
and LAC, the two partners of PANACON, executed the SLA for
the purpose of establishing their respective rights and
duties regarding the upcoming sale of the Hotel. (Rec. Doc.
308-4, SLA at 1). To the extent that the SLA contains a
release of claims, the operative paragraph from the SLA is
paragraph 6 which reads in relevant part as follows:
6. Existing Management Agreement. Simultaneously
with the closing under the Purchase Agreement, LAC will
execute, or cause LAC or other appropriate affiliates thereof
to execute, such instruments or documents as may reasonably
be required to affirm the termination of the Operating and
Management Agreement dated July 2, 1980 between
Intercontinental Hotels Corporation and PANACON, as amended
(“Existing Management Agreement”). The
termination of the Existing Management Agreement would be
subject to the resolution of any disputes between PALIC and
LAC (and its affiliates), and a release of LAC and its
affiliates pursuant to a voluntary termination agreement.
PALIC and LAC agree that LAC will pay PALIC the amount of
$434, 636 on or prior to sale of the Hotel in resolution of
outstanding disputes and such release of LAC and its
affiliates will be for claims related to the Management
Agreement and operation of the Hotel, including without
limitation those related to (a) matters referenced in letters
from PALIC to LAC and its Affiliate dated April 26, 2011,
April 27, 2011, and May 10, 2011, and (b) the categories of