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CG & JS Enterprises L.L.C. v. H&R Block, Inc.

United States District Court, E.D. Louisiana

November 14, 2017

CG & JS ENTERPRISES, LLC, ET AL.
v.
H&R BLOCK, INC., ET AL.

         SECTION: "A" (1)

          ORDER AND REASONS

          JAY C. ZAINEY, UNITED STATES DISTRICT JJUDGE.

         The following motion is before the Court: Motion for Summary Judgment (Rec. Doc. 72) filed by defendant H&R Block Tax Services, LLC. Plaintiffs CG & JS Enterprises, LLC, Christopher Gibbens, and Johnny Shaw oppose the motion. The motion, submitted for consideration on November 1, 2017, is before the Court on the briefs without oral argument. For the reasons that follow, the motion is GRANTED.

         I. BACKGROUND

         Plaintiffs Christopher Gibbens and Johnny Shaw own the legal entity, CG & JS Enterprises, LLC, also a plaintiff herein. Both Gibbens and Shaw were employed by H&R Block Tax Services, LLC (“HRB”) as district managers. Gibbens resigned his employment with HRB in January 2013 under amicable circumstances. (Rec. Doc. 72-2, Def. Exhibit 1, Gibbens 1/23/13 email to Ricks).

         In April 2013, HRB franchisee David Sewell contacted HRB to advise that he and his wife wished to terminate their HRB franchise (DAP Technologies, LLC) due to financial burdens. (Rec. Doc. 72-8, Def. Exhibit 7, Sewell 4/28/13 email to Casey). Shaw contends that Sewell approached him about purchasing the franchise and he became immediately interested due to the economic potential of DAP's location. (Rec. Doc. 101-3, Pla. Exhibit 1, Shaw Affidavit). According to Shaw, he and Sewell reached an agreement but Sewell couldn't simply transfer his franchise agreement to a purchaser; HRB had a contractual right of first refusal to purchase the franchise and any new franchisee would have to be approved by HRB.

         Meanwhile, Shaw had continued his employment with HRB but apparently not without difficulty. In May 2013 Shaw received an unfavorable performance appraisal from his supervisor. (Rec. Doc. 72-3, Def. Exhibit 2, Johnson 5/30/13 email to Shaw). Shaw had also filed a charge of racial discrimination and harassment against his immediate supervisor, Calvin Ricks, and HRB.[1]

         In late May and early June 2013, Ms. Stacy Tyler with HRB was working with Sewell to assist him in completing the steps necessary to sell the franchise. (Rec. Doc. 101-5, Pla. Exhibit 4, Tyler emails to Sewell). The record contains an HRB Letter of Intent (LOI) to Transfer Franchise dated May 30, 2013, which was executed in part by Sewell and in part by Shaw. (Rec. Doc. 72-10, Def. Exhibit 9).

         On June 8, 2013, Tyler emailed Shaw directly to ask him to confirm that he was going to move forward with purchasing the franchise from Sewell so that the paperwork could be sent to legal. (Rec. Doc. 101-6, Pla. Exhibit 5, Tyler 6/8/13 email to Shaw). Shaw responded in the affirmative, and within minutes Tyler replied: “I do not believe you can be both a franchise owner and employed by the company. Is this something you are aware of?” (Rec. Doc. 101-22, Pla. Exhibit 21, Tyler 6/9/13 email to Shaw). Shaw replied, “yes.”[2] (Id.). Less than one hour later Ms. Tyler emailed:

Just sn [sic] FYI, your resignation is contingent upon approval. Therefore, it is important that your field leader be aware of your desire to become a franchisee and that if you are approved you would want to coordinate a transition plan, etc.
If we're in the same page, I'll proceed with the LOI so company can look at FROR.

(Rec. Doc. 101-7, Pla. Exhibit 6, Tyler 6/9/13 email to Shaw) (emphasis added).

         On June 28, 2013, Ms. Lori K. Potts-Wisner sent Shaw numerous documents to be completed as a potential buyer of the DAP franchise. (Rec. Doc. 72-11, Def. Exhibit 10, Potts-Wisner 6/28/13 email to Shaw). The transmittal states that the documents were needed “to prepare the final approval package for review by the Market VP.” (Id.).

         On July 1, 2013, an employee with HRB advised Shaw that HRB would not be pursuing its right of first refusal to purchase the DAP franchise. (Rec. Doc. 101-9, Pla. Exhibit 8, High 7/1/13 email to Shaw).

         Apparently Shaw had decided to voluntarily resign because on July 29, 2013, Ms. Geri Sutter sent Shaw a Confidential Separation and Release Agreement for his consideration and approval. (Rec. Doc. 72-7, Def. Exhibit 6). Shaw executed the Release and his termination date was going to be August 2, 2013. The Release, which has been filed under seal, details the mutual promises that HRB and Shaw agreed to, including that Shaw would voluntarily resign from HRB and settle his pending EEOC claim in exchange for a significant lump sum monetary payment. (Rec. Doc. 72-4, Def. Exhibit 3). Shaw received the monetary consideration. (Rec. Doc. 72-5, Def. Exhibit 4, Pay Summary). The detailed Release contains no promise related to or reference whatsoever to Shaw's efforts to purchase the DAP franchise.[3]

         The record demonstrates that during September 2013, communications between Christopher Gibbens and Potts-Wisner continued (Rec. Docs. 72-12 & 72-13, Def. Exhibits 11 & 12), and on September 13, 2013, Potts-Wisner emailed Gibbens and Sewell that she had received final approval for the franchise transfer and would begin to prepare the contract documents.[4] (Rec. Doc. 72-14, Def. Exhibit 13). On September 18, 2013, Potts-Wisner mailed the contract documents to Shaw at a Denham Springs address. (Rec. Doc. 72-16, Def. Exhibit 15). The transmittal letter contains the following admonition:

We are required by law to provide you with these documents no less than seven calendar days prior to closing. Therefore, if you receive this package on September 19, 2013, the first date which you may return the original signed documents it [sic] to me is September 27, 2013, but not before that date.

(Id.).

         The transmittal letter also contained a reminder that a $2500 deposit check would be ...


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