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Kocurek v. Franks International LLC

United States District Court, W.D. Louisiana, Lafayette Division

October 11, 2017

KATHY KOCUREK, ET AL
v.
FRANK'S INTERNATIONAL, LLC, ET AL

          HANNA MAGISTRATE JUDGE

          MEMORANDUM RULING

          ELIZABETH ERNY FOOTE UNITED STXTES DISTRICT JUDGE.

         Before the Court is a motion for summary judgment by Defendants Frank's International, LLC ("Frank's") and Gary Luquette ("Luquette"). [Record Document 47]. For the reasons discussed below, Defendants' motion for summary judgment is GRANTED IN PART and DENBED IN PART. Plaintiffs, Le Chat Interiors, Inc. ("Le Chat") and Kathy Kocurek ("Kocurek"), have failed to demonstrate the existence of a genuine dispute of material fact regarding their claim that Luquette engaged in tortious interference with a contract. Because further discovery will determine whether there is a genuine dispute of material fact regarding the extent of Le Chat's lost hourly wages, summary judgment is denied on this claim. Summary judgment is likewise denied on Le Chat's claims for lost profits and lost business opportunities, as Plaintiffs have met their burden of production on these claims. However, summary judgment is granted as regards Le Chat's claim for damage to its reputation. Finally, Defendants' summary judgment motion is granted on each of Kocurek's individual claims because she was not a party to any contract with Frank's.

         I. Background

         Le Chat and Kocurek, Le Chat's owner, brought this suit against Frank's and Luquette, Frank's former president and CEO. [Record Document 45 at 5]. The suit alleges that Frank's breached a contract with Le Chat to design the interior of a new office building in Lafayette, Louisiana ("the Lafayette Project") and that by terminating Frank's relationship with Le Chat, Luquette engaged in tortious interference with a contractual relationship. [Record Document 45 at 6-7].

         In 2013, Frank's contacted Le Chat to determine whether Le Chat would be interested in developing the interior design for the Lafayette Project. [Record Document 47-4 at 78]. After agreeing to accept the job, Le Chat prepared a Letter of Engagement ("Letter of Engagement"), which was signed on March 14, 2013 by Kocurek and Keith Mosing ("Mosing"), Frank's then-CEO. [Record Documents 47-4 at 32-33, 280]. The Letter of Engagement indicated that Le Chat would be paid $100 per hour for its "interior design services" to "complete the project" at Frank's; the services were to include "developing a color scheme, sourcing furniture, spatial planning, fixtures, wall coverings, fabrics and materials; designing] custom furniture and built ins; designing] window treatments where applicable; selecting] materials for flooring, counters and cabinetry, hardware, and presenting] selections that represent the best choices for your space." [Record Document 47-5].

         Le Chatperformed design work for approximately two years, for which it billed and was paid at its hourly rate. [Record Documents 47-1 at 5, 47-4 at 28, and 47-6 at 1-2]. In January 2015, Luquette replaced Mosing as President and CEO of Frank's. [Record Document 54-4 at 3]. After assuming his position, Luquette convened a team to review the Lafayette Project; the team's report determined that Le Chat's design choices could be simplified and standardized to reduce costs. [Record Document 47-3 at 54-55 and 47-7 at 1-2, 23]. On March 11, 2015, Luquette met with Kocurek and terminated Le Chat's involvement with the Lafayette Project. [Record Document 54-4 at 5]. Interior design work for the Lafayette Project was completed by Gensler Architecture, Design, and Planning, P.C. ("Gensler"). [Record Document 47-7 at 2]. Plaintiffs filed suit in the Fifteenth Judicial District Court in Lafayette, Louisiana; Defendants then removed the case to this Court. [Record Documents 1 and 1-2 at 3].

         Plaintiffs contend that Luquette tortiously interfered with the contract between Le Chat and Frank's when he terminated Le Chat's contract prior to the Lafayette Project's completion. [Record Document 45 at 7-8].They argue that by selecting Gensler, a company with which he had worked before, Luquette acted against Frank's best interests. [Record Documents 45 at 5 and 54 at 8].

         Plaintiffs further allege that Frank's breached its contract with Le Chat by terminating the business relationship prior to the completion of the Lafayette Project. [Record Document 45 at 6-7]. Plaintiffs contend that this breach deprived Le Chat of the opportunity to earn a commission from the sale of furniture and accessories to Frank's. [Record Document 47-4 at 33-36]. In addition, Plaintiffs allege that they incurred lost business opportunities when Le Chat declined other design work because it was too busy with the Lafayette Project. [Record Documents 45 at 6 and 54 at 11-13]. Finally, Plaintiffs allege lost wages for the remaining work that Le Chat was not allowed to complete on the Lafayette Project. [Record Document 45 at 6].

         II. Analysis

         A. Standard of Review

         Federal Rule of Civil Procedure 56(a) directs that a court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."[1] Summary judgment is appropriate when the pleadings, answers to interrogatories, admissions, depositions, and affidavits on file indicate that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). When the burden at trial will rest on the non-moving party, the moving party need notproduce evidence to negate the elements of the non-moving party's case; rather, it need only point out the absence of supporting evidence. See Id. at 322-23.

         If the movant satisfies its initial burden of showing that there is no genuine dispute of material fact, the nonmovant must demonstrate that there is, in fact, a genuine issue for dispute at trial by going "beyond the pleadings" and designating specific facts for support. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citing Celotex, 477 U.S. at 325). "This burden is not satisfied with 'some metaphysical doubt as to the material facts, "' by conclusory or unsubstantiated allegations, or by a mere "'scintilla' of evidence." Id. (first quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); and then quoting Davis v. Chevron U.S.A., Inc., 14 F.3d 1082 (5th Cir. 1994)) (first citing Lujan v. Nat'l Wildlife Fed'n, 947 U.S. 871, 871-73 (1990); and then citing Hopper v. Frank, 16 F.3d 92 (5th Cir. 1994)). However, "[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1985) (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 158-59 (1970)); see Reid v. State Farm Mut. Auto Ins. Co., 784F.2d577, 578 (5th Cir. 1986)(citing U.S. Steel Corp. v. Darby, 516 F.2d 961 (5th Cir. 1975)) ("The court will review the facts drawing all inferences most favorable to the party opposing the motion."). While not weighing the evidence or evaluating the credibility of witnesses, courts should grant summary judgment where the critical evidence in support of the nonmovant is so weak and tenuous that it could not support a judgment in the nonmovant's favor. Little, 37 F.3d at 1075 (citing Armstrong v. City of Dall., 997 F.2d 62 (5th Or. 1993)).

         B. Le Chat's Tortious Interference Claim

         Plaintiffs allege that by terminating the agreement before Le Chat had "completed" design work on the Lafayette Project, Luquette committed tortious interference with Le Chat's contract with Frank's. [Record Documents 45 at 7-8]. In response, Defendants argue that the decision to terminate the contract, even if it was a breach, was justified under the circumstances and thus that Luquette is not liable. [Record Document 47-1 at 18-20].

         To establish tortious interference with a contractual relationship, a plaintiff must prove:

(1) the existence of a contract or a legally protected interest between the plaintiff and the corporation; (2) the corporate officer's knowledge of the contract; (3) the officer's intentional inducement or causation of the corporation to breach the contract or his intentional rendition of its performance impossible or more burdensome; (4) absence of justification on the part of the officer; (5) causation of damages to the plaintiff by the breach of contract or difficulty of its performance brought about by the officer.

9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228, 234 (La. 1989). Although it appears that the parties do not dispute the first three elements, [2] the parties did not fully brief them. Therefore, the Court will assume that a contract existed between Le Chat and Frank's, that Luquette was aware of this contract, and that he intentionally caused Frank's to breach its contractual obligations.

         The parties dispute whether Luquette had an appropriate justification for terminating the contract prior to the completion of the Lafayette Project. [Record Document 47-1 at 18-20 and 54 at 11-13, 21]. A corporate officer's conduct is justified "if he acted within the scope of his corporate authority and in the reasonable belief that his action was for the benefit of the corporation." Spurney, 538 So.2d at 231; see Grant v. Farm Credit Bank of Tex., 841 F.Supp. 186, 190 (W.D. La. 1992), aff'd, 8 F.3d 295 (5th Cir. 1993); Dorsey v. N. Life Ins. Co., No. 04-cv-0342, 2005 WL 2036738, at *17 (E.D. La. Aug. 15, 2005); Hampton v. Live Oak Builders, Inc., 608 So.2d 225, 226 (La. Ct App. 1992). All parties agree that as President and CEO, Luquette had the authority to terminate the Le Chat contract. [Record Document 47-1 at 18]. Indeed, Plaintiffs expressly allege as much: "Luquette, as the new President and CEO, had the power and authority to bind and dissolve contracts on behalf of Frank's International." [Record Document 45 at 5]. As a result, this Court may assume that Luquette did not exceed the scope of his authority when terminating the Le Chat contract.

         When first recognizing the tort of tortious inteference, the Louisiana Supreme Court identified a corporate officer's fiduciary duty toward the corporation as a source of the officer's immunity from tort liability. Spurney, 538 So.2d at 232 (citing La. Stat. Ann. § 12:226 (2010)).[3]Under the Louisiana Business Corporation Act, an officer is immune from liability to shareholders for her business decisions so long as she acts "[i]n good faith, ... [w]ith the care that a person in a like position would reasonably exercise under similar circumstances, [and] [i]n a manner [she] reasonably believes to be in the best interests of the corporation." La. Stat. § 12:1-842(A) (Supp. 2017). Hence, an officer breaches her fiduciary duty only when she acts in bad faith, unreasonably, or in a manner that she does not reasonably believe is in her corporation's best interests. As a result, an officer's reasonable business decision to cause her corporation to breach a contract is not a breach of her fiduciary duty to the corporation unless she lacked a reasonable belief that she was acting in the corporation's best interests. Thus, if she believed she was acting in the corporation's best interests, then her decision cannot give rise to personal liability to the corporation. It follows, then, that a similarly well-reasoned decision to cause the corporation to breach a contract does not generate tort liability to the other party to the contract, provided that the officer reasonably believed she was acting in the corporation's best interests. See Spurney, 538 So.2d at 234-35; Spencer-Wallington, Inc. v. Serv. Merck, Inc.,562 So.2d 1060, 1064 (La. Ct. App. 1990) ("In Spurney, the duty of the third party independent of the contract [i]s the fiduciary duty imposed upon the corporate officer to act within his scope of authority and in the best interests of the corporation, thus resulting in the immunity recognized for conduct consistent with this fiduciary duty."). Because financial harm resulting from an officer's decision does not render that officer personally liable to her corporation in the absence of disloyal or unreasonable conduct, a financial loss to a corporation cause by a breach of contract does not, in itself, render the officer liable to a third party that has contracted with the corporation. See 8 La. Civ. L. Treatise, Business Organizations ยง 33.13 n. 16 (2016) (suggesting that ...


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