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Bayou Industrial Sales, L.L.C. v. Petro-Valve, Inc.

United States District Court, M.D. Louisiana

November 8, 2017

BAYOU INDUSTRIAL SALES, LLC
v.
PETRO-VALVE, INC.

          RULING AND ORDER

          BRIAN A. JACKSON, CHIEF JUDGE

         Before the Court is the First Amended Motion for Summary Judgment (Doc. 64) filed by Defendant Petro-Valve, Inc.[1] Also before the Court is the Motion for Summary Judgment (Doc. 68) filed by Plaintiff Bayou Industrial Sales, LLC ("Bayou") and the Motion to Strike Plaintiffs Summary Judgment Evidence (Doc. 76) filed by Defendant. For the following reasons, the First Amended Motion for Summary Judgment (Doc. 64) filed by Petro-Valve, and the Motion for Summary Judgment (Doc. 68) filed by Bayou are GRANTED IN PART and DENIED IN PART, and the Motion to Strike (Doc. 76) is DENIED.

         I. BACKGROUND

         The following facts are undisputed unless otherwise noted. Petro-Valve distributes industrial valves, (Docs. 64-1 and 80-1 at ¶ 1), and Kevin Foote, David Foote, and Kevin Barre are sales representatives. Id. at ¶ 2. In early 2014, Petro-Valve began negotiating with the three salesmen to work for Petro-Valve in Louisiana. Id. at ¶ 3. As negotiations progressed, Petro-Valve's accountant suggested that Kevin Foote, David Foote, and Barre each form their own limited liability companies that would then become members of a single limited liability company that would contract with Petro-Valve. (Doc. 68 at ¶12 and Doc. 75 at ¶ 12). The accountant suggested this arrangement because it would allegedly offer favorable tax benefits. (Doc. 68-3 at 66:1-2).

         On April 21, 2014, Bayou and Petro-Valve executed a consulting agreement (the "Contract"), in which Bayou agreed to provide "outside sales services" to Petro-Valve, for a base payment of $42, 083.33 a month, which is $505, 000 a year. (Doc. 64-3). Keith Foote testified that Petro-Valve and Bayou arrived at this figure based on a yearly salary of $200, 000 for Kevin Foote, $180, 000 for Barre, and $125, 000 for David Foote. (Doc. 64-38 at 135:16:20).

         Petro-Valve also agreed to pay Bayou a 10% commission, up to $1, 500 a month for "entertainment, " $1, 000 a month for vehicle mileage/gas, $100 a month cell phone reimbursement, and $1000 a month for health insurance "per consultant." (Doc. 64-3 at p.l). The Contract, however, does not specify the number or identify of the consultants. Id. The Contract had a three-year term. Id. The Contract also contains two provisions relating to its termination:

Extended Payment for Services: In the event this consulting agreement is terminated, consultant will receive 6 months of base payment. Should the consultant engage in a business that is a conflict of interest, the extended payment will cease.
Full Time Employment Status: In the event this consulting agreement is terminated and full time employment status is offered, there will be no renegotiation of the base payment and commission rate as noted above.

Id. at p. 2 On May 2, 2014, Bayou filed amended articles of incorporation, identifying its members as David Foote Consulting, LLC, Keith Foote, LLC, and Barre Industrial Sales, LLC. (Doc. 68-1 and 75 at ¶ 26). A little over two months later, on July 9, 2014, Barre informed Petro-Valve that he was resigning from Bayou. Id. at ¶ 37. After that, Bayou invoiced Petro-Valve $27, 083.34 a month for August, September and October of 2014, rather than the $42, 083.33 a month the Contract provided. (Doc. 64-1 and 80-1 at ¶ 31). Bayou reduced the payment it invoiced Petro-Valve based on what Bayou had paid Barre each month. (Doc. 64-39 at 58:13:25). Petro-Valve paid these invoices. (Doc. 64-1 and 80-1 at ¶ 33).

         On September 29, 2014, David Bash, a Petro-Valve manager, emailed David and Keith Foote, cancelling the Contract. (Doc. 64-12 at p. 1-2). He wrote that it "should have been cancelled when [Barre] departed" and that "[t]he new employment agreement we have been discussing will be effective today, upon cancellation of the [contract]." Id. at p. 1. David Foote responded that if Petro-Valve wanted "to modify the Contract and eliminate Barre's portion from the Contract and keep the rest of the plan in place ... we would be willing to sign that[.]" Id- at p. 1.

         Ultimately, rather than modify the Contract, Kevin and David Foote became Petro-Valve employees. On October 6, 2014, Kevin and David Foote signed employment agreements with Petro-Valve, and the agreements were back-dated to October 1, 2014. (Docs. 64-16 and 64-17) Keith Foote's yearly salary under the employment agreement was $200, 000.00 and David Foote's salary was $125, 000.00. Id. Like the Contract, the commission rate was 10% and the agreement provided for expense reimbursements for entertainment of up to $1500 per month, mileage/gas up to $1000 per month, cell phone up to $100 per month, as well as $1000 per month for health insurance. Id. Kevin and David Foote worked for Petro-Valve until April 9, 2015. (Docs. 64-1 and 80 at ¶ 65).[2]

         Bayou claims that Petro-Valve is liable for: (1) $1, 289, 280.32 in unpaid base payments for the remaining three years on the Contract; (2) another six months of base payments totaling $252, 499.98 because Bayou did not engage in business that was a conflict of interest; (3) $44, 999.97 in unpaid base payments for the period between April 21, 2014 (the effective date of the contract) and September 29, 2014 (the date Petro-Valve terminated the contract); and (4) $62, 000 in health insurance premiums. (Doc. 60 at ¶ 11-14).

         Plaintiffs filed suit in the 19th Judicial District Court, East Baton Rouge Parish, Louisiana on April 9, 2015. (Doc. 1-2). Invoking the Court's diversity jurisdiction, Petro-Valve removed the case on May 3, 2015. (Doc. I).[3]

         II. LEGAL STANDARD

         Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(a). "[W]hen a properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (quotation marks and footnote omitted).

         In determining whether the movant is entitled to summary judgment, the Court "view[s] facts in the light most favorable to the non-movant and draw[s] all reasonable inferences in her favor." Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir. 1997) (citing Brothers v. Klevenhagen, 28 F.3d 452, 455 (5th Cir.1994)). At this stage, the Court does not evaluate the credibility of witnesses, weigh the evidence, or resolve factual disputes. Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1263 (5th Cir. 1991), cert, denied, 502 U.S. 1059 (1992). However, if the evidence in the record is such that a reasonable jury, drawing all inferences in favor of the non-moving party, could arrive at a verdict in that party's favor, the motion for summary judgment must be denied. Int'l Shortstop, Inc., 939 F.2d at 1263. On the other hand, the non-movant's burden is not satisfied merely upon a showing of "some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).

         In sum, summary judgment is appropriate if, "after adequate time for discovery and upon motion, [the non-movant] fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Summary judgment will He only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." Sherman v. Hallbauer, 455 F.2d 1236, 1241 (5th Cir. 1972). III. DISCUSSION Before addressing the merits of the cross-motions for summary judgment, the Court will address Petro- Valve's Motion to Strike twenty-three paragraphs contained in Keith and David Foote's declarations.[4] (Doc. 76-1).

         First, Petro-Valve objects to seventeen paragraphs in the declarations because they purportedly contain self-serving or argumentative statements. (Doc. 76-1 at p. 3-5). The United States Court of Appeals for the Fifth Circuit has held that "[a] party's own testimony is often self-serving, but we do not exclude it as incompetent for that reason alone." C.R. Pittman Const. Co. v, Nat'l Fire Ins. Co. of Hartford,453 Fed.Appx. 439, 443 (5th Cir. 2011) (internal quotations omitted). Indeed, as long as an affidavit is based on personal knowledge, contains factual assertions, and meets the usual requirements for admissibility, it may ...


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